The phone call from Obama came amidst news reports that the US National Security Agency had been tracking Merkel's cellphone.
"He assured the Chancellor that the United States is not monitoring and will not monitor the communications of the Chancellor," White House press secretary Jay Carney told reporters.
Carney said the President has ordered a review of the manner in which US collects foreign intelligence. "The United States greatly values our close cooperation with Germany on a broad range of shared security challenges.
As the president has said, the US is reviewing the way that we gather intelligence to ensure that we properly balance the security concerns of our citizens and allies with the privacy concerns that all people share," Carney said.
"Both leaders agreed to intensify further the cooperation between our intelligence services, with the goal of protecting the security of both countries and of our partners, as well as protecting the privacy of our citizens," he said in response to a question.
"All I can tell you is what the President told the chancellor. The United States is not monitoring and will not monitor the communications of the chancellor."
"As we've said in the past we gather foreign intelligence just like similar agencies of other countries, but we are working to -- as the president has said -- review the way that we gather intelligence, to ensure that we properly balance both the security concerns of our citizens and allies with the privacy concerns that everyone shares," Carney said.