In a country where privacy is an almost sacred right, a new suggestion that the US government is running a surveillance programme has explosive potential because it reaches into the home of every American.
By James Westhead
BBC News, Washington
Mr Bush responded quickly to the charge - a sign of its seriousness
President Bush has defended the secret wiretapping of al-Qaeda suspects and their associates without court warrants, but these latest revelations suggests tens of millions of innocent Americans are being caught up in the surveillance net.
USA Today claims that after 9/11, the National Security Agency (NSA) asked all the major phone companies for access to their records of all calls.
An anonymous source told the paper the agency's goal is "to create a database of every call ever made" within the nation's borders.
The spy agency was not listening to or recording the content of the calls, but tracking the phone numbers and call duration to try to analyse patterns for potential terrorist activity.
The three largest telecommunications companies - AT&T, Verizon and BellSouth - agreed to the government request, the paper claimed.
WHAT IS THE NSA?
US government intelligence service founded as a code-breaking agency in 1952
Intercepts communications using satellites and bugs
Said to be largest employer of mathematicians in the US
Budget and staff size classified
Agency as a whole is so secretive its initials are said to stand for "No Such Agency"
Significantly, one company, Qwest based in Denver, declined to participate - concerned about the legality of the process.
Professor Jonathan Turley, a legal analyst at George Washington University, describes the alleged monitoring programme as a "legally questionable fishing operation."
He argues: "Federal law prevents the government from seeking this kind of information - including phone numbers - unless it has cause to believe a crime has been committed."
Already a number of organisations have started or are planning legal challenges, including the Electronic Frontier Foundation, an internet advocacy group.
It is suing AT&T in light of testimony from Mark Klein - a former technician turned whistleblower who claims the NSA has secret spying rooms inside the company's facilities.
"It appears the NSA is capable of conducting what amounts to vacuum-cleaner surveillance of all the data crossing the internet, whether that be people's e-mail, Web surfing or any other data," Mr Klein said in a statement released by his lawyers.
Even Bush allies like John Boehner have doubts
The political implications may be more damaging than the legal challenges.
US senators and congressman on both sides of the political divide reacted with alarm and outrage to the reports.
Even a Republican leader in the House of Representatives, John Boehner - a close Bush ally, responded: "I'm very concerned about what I've heard ... I can't see why it would be necessary for us to keep and have this kind of information."
The Senate judiciary committee immediately announced it would be investigating and could call senior government figures such as Attorney General Alberto Gonzales, who only last month had failed to mention the programme when questioned by the committee.
Significantly, President Bush responded immediately to the reports - a sign his administration fears the scandal could be damaging.
He neither confirmed nor denied his government was collecting phone records but insisted, "We're not mining or trolling through the personal lives of innocent Americans".
That statement will now come under intense scrutiny as the Senate begin to examine the nature of this latest surveillance programme.
The first casualty could be the president's new nominee to head the CIA spy agency - General Michael Hayden, the former head of the NSA.
He was responsible for the controversial warrantless wiretapping programme and will now face a grilling over this wider NSA operation during what will be a rocky confirmation process.
The broader question, though, is how Americans generally will react to the idea of Uncle Sam spying on their phone records and whether they are willing to sacrifice a degree of privacy in the name of security.