In an article for the Financial Times, Mr Hannigan said: “I understand why they [US technology companies] have an uneasy relationship with governments. They aspire to be neutral conduits of data and to sit outside or above politics.
“But increasingly their services not only host the material of violent extremism or child exploitation, but are the routes for the facilitation of crime and terrorism.
“However much they may dislike it, they have become the command-and-control networks of choice for terrorists and criminals, who find their services as transformational as the rest of us.
“GCHQ is happy to be part of a mature debate on privacy in the digital age. But privacy has never been an absolute right and the debate about this should not become a reason for postponing urgent and difficult decisions.”
Mr Hannigan took on the role of director of GCHQ last month after a distinguished career as a senior diplomat.He was appointed to the role in the wake of the Snowden scandal to help bolster the public profile of the organisation and take a more active role in the debate about its work.
He highlighted the eruption of extremist jihadi material online on websites such as Twitter, Facebook and Whatsapp, and said that terrorists are now able to hide their identities using encryption tools which were once only available to states.
He said that in the past, al-Qaida and its and terrorists have used the internet as a place to anonymously distribute material or “meet in dark spaces”.
Isil, however, has taken a must more direct approach, using social networking services to get their messages across in a “language their peers understand”.
He highlighted the production values of videos in which they attack towns, fire weapons and detonate explosives, saying that they have a “self-conscious online gaming quality”.
He said that even the groups grotesque videos of beheadings highlight the sophistication of their use of social media. “This time the ‘production values’ were high and the videos stopped short of showing the actual beheading,” he said.
“They have realised that too much graphic violence can be counter productive in their target audience and that by self-censoring they can stay just the right side of the rules of social media sites, capitalising on western freedom of expression.”
He highlighted the use of popular terms on Twitter to broaden their appeal such as World Cup and Ebola. He said that during the advance on Mosul in Iraq the jihadists were sending 40,000 tweets a day.
He said that their cause has been helped by Mr Snowden as they copy his high levels of encryption to disseminate their message, with some programmes and apps even advertised as “Snowden approved”. “There is no doubt that young foreign fighters have learned and benefited from the leaks of the past two years,” he said.
He said families who use the internet have “strong views” about the ethics of companies and do not expect want the social networks they use to be “facilitate murder or child abuse”.
He indicated, however, that new legislation may be required. In Britain, the Conservatives are pushing for a new communications data bill to give the security services greater access to internet communications. The move has been blocked by the Liberal Democrats.
He said: “For our part, intelligence agencies such as GCHQ need to enter the public debate about privacy. I think we have a good story to tell.
“As we celebrate the 25th anniversary of the spectacular creation that is the world wide web, we need a new deal between democratic governments and the technology companies in the area of protecting our citizens.
“It should be a deal rooted in the democratic values we share. That means addressing some uncomfortable truths. Better to do it now than in the aftermath of greater violence.”
US internet companies including Google, Facebook, Twitter and Microsoft declined to comment.