British and Russian diplomatic relations are said to be their lowest level for years after revelations that British spies in Moscow have been caught using a fake rock to communicate with their agents.

The spying scandal was exposed after the Russian security service the KGB said that Britain had reneged on a “deal" whereby Russia and Britain had agreed not to spy on each other at the end of the Cold War.

Russian and British television has shown grainy images of British agents picking up the fake rocks which had been hollowed out to be filled by special electrical equipment.

Whilst the spying rock has been widely viewed in Britain as an embarrassing incident by blundering spies, it once again gives us a glimpse of what our security services are up to. But you don’t have to travel to Moscow to be spied on. It happens at home. In the West, we should not be worried about how much we are spying on the Russians but how much our governments are spying on ourselves.

In Washington there is a growing political crisis over an illegal spying programme by the National Security Agency (NSA) that was authorized by President Bush after September 11. Bush authorised that the NSA, whose primary mission is to spy overseas, could begin monitoring the international e-mail messages and phone calls of people inside the United States who were linked, even indirectly, to known terror suspects.  What this meant was that for the first time vast quantities of international telephone and Internet communications of innocent Americans was monitored without prior approval from by the American court.

Public opinion in America is deeply divided as to the legality and necessity of this covert surveillance. President Bush and the Republican Party argue that the searches are legal and critical to the security and safety of America if they are to prevent another terrorist attack. The President calls the eavesdropping a “vital tool” against terrorism, whereas his Vice President Dick Cheney has said it has saved “thousands of lives”.

 In contrast, the Democrats and a whole host of civil rights and environmental groups argue that the laws are illegal and violate the Constitution. This month the American Civil Liberties Union (ACLU) filed a lawsuit against the NSA “seeking an end to the secret program of illegal electronic surveillance authorized by President Bush.”

The ACLU argues that “Though the president claims he can authorize warrantless spying on Americans, his surveillance program is illegal. It violates the First and Fourth Amendments of the Constitution and exceeds the limits of executive authority.  This warrantless domestic surveillance must end.”

There is also evidence that rather than save lives as Cheney claims, all the programme has done is waste time and therefore cost lives. The New York Times, the paper that originally broke the eavesdropping story last December, reported recently how “in the anxious months after the Sept. 11 attacks, the National Security Agency began sending a steady stream of telephone numbers, e-mail addresses and names to the F.B.I. in search of terrorists. The stream soon became a flood, requiring hundreds of agents to check out thousands of tips a month. But virtually all of them, current and former officials say, led to dead ends or innocent Americans.”

And that is the problem with all this surveillance. As more of us are watched, listened to and spied on, the easier it becomes to find us guilty. In time, the innocent become the guilty.  Such is the political fall-out from the scandal, that Senator Arlen Specter, the Pennsylvania Republican and chairman of the powerful Senate Judiciary Committee, is planning hearings on the surveillance program that will be held next month.

But just as American politicians debate illegal spying, in Britain politicians could also be spied upon.  Prime Minister Tony Blair is preparing to scrap a 40-year ban on the phone tapping of MPs' telephones and electronic mail, despite fierce opposition from within his own Cabinet and from his own MPs. Soon our unelected spies will be spying on our elected politicians in a move that signals a power shift from politicians to our security services.

Many are very angry at the move. Andrew Mackinlay, Labour MP for Thurrock, argues it is a "hallmark of a civilised country" that the State does not spy on its elected representatives. Mackinlay argues that “constituents, pressure groups and other organisations need to know for sure that they are talking to their elected representatives in complete confidence.”

But it is not just MPs who are being monitored. Since Labour came to power there has been a huge explosion of surveillance of ordinary citizens. We may be spying on the Russians but the reality is that British citizens are amongst the most spied-on citizens.

In Britain we have more CCTV (close circuit television cameras) per capita than anywhere else in the world. We are watched as we shop, travel, and work. If that is not enough, Britain is set to become the first country anywhere in the world where the movements of all vehicles on the roads are recorded. A new national surveillance system will read the number plates of cars and will hold records for at least two years.

And now it is not just car drivers who are going to be watched. Last week, it was announced that the British police and security services are to be given new powers that will mean they can monitor the movement of 40 million air and ferry travellers on journeys inside the UK. The security services will be given passenger lists that will mean that for the first time they can track movements of people in real time on airplanes and ferries.

The State is collecting information on us in different ways too. The government is slowly but surely collecting information on the innocent. Last week a British MP launched a campaign to have the profiles of 24,000 innocent young people removed from a national database that includes their genetic information.

Although it has been routine for people who have been arrested by the police to have their finger-prints taken or other genetic information stored, the MP has found that some thousands of youngsters were on the data-base who had never been cautioned, charged or convicted of a criminal offence. Slowly the innocent become the guilty.

Every day we slip closer into an authoritarian state. British Government figures released last  week show that the number of people being stopped and searched by the Police has risen twentyfold in six years. Every day last year 100 people were stopped and searched. You are now considered a terrorist by the colour of you skin or the way you dress.

It is not surprising that opposition to surveillance powers is coming from both sides of the political spectrum. The right-wing newspaper the Mail on Sunday, normally one to approve of any government moves to supposedly tackle crime, has had enough. In an editorial in last week end’s newspaper, entitled “From a free state to State control – and all by stealth” the paper said that “this country is being converted from a relatively free one into one which the State knows all about us and keeps us under close watch, and in which we will have to justify ourselves to the State rather that the other way round.”

From the political left, the Liberal Democrats have said they are worried about the surveillance and that Britain was building up spying powers unparalled in the free world. Slowly but surely, the State is becoming more intrusive into our lives. Its listens to us, it watches us, it monitors our every move. We are told that our spies and secret government agencies have to do this in order to protect us from terrorism. They have to protect us so that we can be free. The ultimate irony is that the more they do it the more we are not free. The more we destroy the very thing we are trying to protect.

For years, those of us in the West were told that the Russians had the most oppressive secret services and police in the world. We were lucky we did not live under the regime of the KGB. Well the KGB has exposed our spies and their methods in Moscow. It is time we exposed them too. Only the ones we need to expose are not in Moscow but are at home.