Lowered budgets for the security services risks damaging Britain's vigilance against terrorist threats, MPs have said.
The intelligence and security committee (ISC), which reports directly to the prime minister, raised concerns about the 11.3% spending cuts forced upon GCHQ, MI5 and MI6.
It said the budget reduction "will inevitably have an impact on the ability of all three agencies to maintain current levels of coverage of all aspects of the threat".
This problem could worsen if inflation remains at its current levels, the committee's annual report concluded.
"The committee has been impressed by the dedication, professionalism, and commitment of those members of the intelligence community it has met," chairman Sir Malcolm Rifkind said.
"While the report highlights some problems or concerns, they should not detract from our view that those working in this field continue to excel at a tremendously challenging task."
MPs raised particular concerns about cybersecurity, however. They said GCHQ was struggling to retain "a suitable cadre of internet specialists" and urged the Cabinet Office to consider authorising a system of bonuses for specialist skills, like that in use in the US.
"The committee welcomes the identification of cyber security as a tier one risk in
the national security strategy and the increased investment in this crucial area," the report stated.
"However, concerns expressed in the ISC's last annual report concerning the lack of clear lines of responsibility and the potential risk of duplication of effort remain."
MPs suggested moving ministerial responsibility to the Cabinet Office would be the best way of quickly resolving this problem
MPs seek extra spy scrutiny
The report also launches a bid for more oversight of the security services. MPs argue current arrangements for accountability and transparency are "unsustainable".
They want the committee's remit to be officially expanded to include all the work of MI5, MI6, SIS and GCHQ, including operations. At present it only scrutinises policy, administration and finances.
Only Cabinet ministers should be permitted to withhold information from MPs, rather than the heads of the agencies. At present the committee can only request, rather than require, information.
"Public expectation in terms of transparency and openness has increased significantly during this time, and we must ensure that the committee now has the powers and remit that are necessary to provide reassurance to the public and to parliament," its report stated.
"It is essential that we are able to provide credible reassurance that, consistent with necessary secrecy and security, the agencies operate in the public interest."
MPs want No 10 to agree to incorporate their recommendations into a forthcoming green paper on the protection of intelligence material in the courts.