* Spy chief singles out U.S. technology giants
* Twitter, Facebook decline immediate comment
* Islamic State harnessing Internet to stoke jihadi threat
* Rights activists scold GCHQ (Adds Cameron, rights' activist comment)
By Guy Faulconbridge
LONDON, Nov 4 (Reuters) - Twitter and Facebook are so important to militant groups that the technology giants should give security services greater access to their networks to allow governments to foil attacks, the head of Britain's eavesdropping agency said.
The new director of Britain's GCHQ, Robert Hannigan, said U.S. tech companies Twitter Inc, Facebook Inc and WhatsApp were in denial about their unintended role as "the command and control networks of choice for terrorists".
Islamic State militants are harnessing the power of the Internet to create a militant network with near global reach just a quarter of a century since the creation of the World Wide Web, Hannigan said.
"The challenge to governments and their intelligence agencies is huge -- and it can only be met with greater co-operation from technology companies," Hannigan wrote in the Financial Times newspaper.
"If they are to meet this challenge, it means coming up with better arrangements for facilitating lawful investigation by security and law enforcement agencies than we have now."
Twitter and Facebook, which owns WhatsApp, declined repeated requests for comment. GCHQ also declined to comment.
Data compiled by Twitter showed it had received 78 "information requests" from the British government in the first half of 2014. Facebook says organisations with a record of terrorist or violent criminal activity are not allowed to maintain a presence on its site.
Such a strong public warning from one of the West's most powerful spies indicates the gravity of the perceived threat, and a sense of frustration felt by many spies about the damage done by former National Security Agency contractor Edward Snowden.
Media reports based on previously top secret documents stolen by Snowden, a U.S. citizen who now lives in Moscow, laid bare the extent of American and British surveillance, including demands spies made to telephone and technology companies.
In the wake of the Snowden revelations, GCHQ, which stands for Government Communications Headquarters, was accused by privacy groups and some lawmakers of the widespread illegal monitoring of electronic communications.
British ministers denied any illegality and top spies dismissed any sinister intent, saying they sought only to defend the liberties of Western democracies.
The director general of the MI5 Security Service, Andrew Parker, warned last year that the revelations were a gift to terrorists because they had exposed GCHQ's ability to track, listen and watch plotters.
"Young foreign fighters have learnt and benefited from the leaks of the past two years," Hannigan said.
"ISIS IT DEPARTMENT"
GCHQ, MI5 and Britain's foreign spy service, MI6, need greater support from the private sector, said Hannigan, who singled out U.S. technology companies in particular. No British-based companies were named.
Prime Minister David Cameron's office said the premier agreed with the spy chief's comments.
"The prime minister very much shares the view that is being expressed there around the use of web-enabled, Internet access technologies by violent and extremist groups amongst others and the need to do more," a Downing Street spokesman said.
Hannigan said Islamic State militants, who have seized swathes of land in Syria and Iraq, were harnessing the power of technology in a new and dangerous way.
While al Qaeda mainly hid in the shadows of the Internet using it as a modern drop box or secret ink, Islamic State is noisily using it to advertise itself, radicalise new recruits and intimidate with grotesque videos of beheadings, he said.
"The ISIS (Islamic State) leadership understands the power this gives them with a new generation," Hannigan said, adding that militants had used World Cup and Ebola hashtags on Twitter messages to pitch their views to a wider audience.
"The extremists of ISIS use messaging and social media services such as Twitter, Facebook and WhatsApp," he said.
Hannigan cast GCHQ, which fishes for intelligence in the world's cyber oceans from a futuristic building called the doughnut in the western English spa-town of Cheltenham, as hindered by technology companies and a mistaken assumption that privacy was an absolute right.
"It can seem that some technology companies are in denial about its misuse," he said. "I suspect most ordinary users of the Internet ... do not want the media platforms they use with their friends and families to facilitate murder or child abuse."
Rights activists said it was disappointing to see GCHQ attack companies rather than addressing what they said was a lack of confidence in the agency after revelations about the scope of its eavesdropping.
"'Privacy never an absolute right' in spook, translates as 'state shall be able to invade privacy if convenient, without particular reason'," tweeted Caspar Bowden, a rights activist who worked as chief privacy advisor for Microsoft Corp until 2011.
Bowden has been critical of U.S. tech companies for failing to be more transparent about compromises they have made with government surveillance agencies.
(Additional reporting by Shivam Srivastava in Bangalore, Michael Holden, Kate Holton and Kylie MacLellan in London, Eric Auchard in Frankfurt; Editing by Andrew Heavens and Susan Fenton)