The activities of Communications Security Establishment Canada, known as CSEC, are reviewed by an independent watchdog, Nicholson told the House of Commons on Thursday.
"That independent commissioner has indicated, for the last 16 years, that CSEC has complied with all Canadian laws," said Nicholson, the minister responsible for the shadowy spy service.
Documents disclosed by a former spy contractor indicate the United States conducted widespread surveillance at the Toronto G20 summit in 2010 — and that CSEC knew about it.
CBC reported Wednesday the briefing notes show Canada allowed the U.S. National Security Agency to conduct the operation from its Ottawa embassy during the 2010 G8 and G20 summits.
The report cited documents obtained by Brazil-based journalist Glenn Greenwald, who got them from Edward Snowden, a former contractor with the NSA turned whistleblower.
One note describes the NSA plans as being "closely co-ordinated with the Canadian partner" — an apparent reference to CSEC.
There was no information on specifics of the purported spying operation. The documents describe part of the mandate as "providing support to policymakers."
Documents previously leaked by Snowden suggest Canada helped the United States and Britain spy on participants at the London G20 summit the year before the Toronto gathering. Britain's Guardian newspaper published presentation slides describing the operation, including one featuring the CSEC emblem.
During question period Thursday, Opposition Leader Tom Mulcair pressed the government on whether CSEC or anyone else in the Canadian government authorized, "in any way, shape or form," the NSA to spy on Canadian soil.
Nicholson did not answer directly, but stuck to standard media lines, saying that, under the law, CSEC is prohibited from targeting Canadians. "Furthermore, CSEC cannot ask our international partners to act in a way that circumvents Canadian laws."
Nicholson's comments echoed those of CSEC chief John Forster, who emerged just hours earlier from a parliamentary committee — where he was testifying on other matters — to give essentially the same focused response.
CSEC has a budget of more than $400 million and a staff of more than 2,000 — including skilled mathematicians, codebreakers, linguists and programming experts.
A spokesman for Prime Minister Stephen Harper said Thursday the government would not comment on "operational matters related to national security."
"Our security organizations have independent oversight mechanisms to ensure that they fulfil their mandate in accordance with the law," Jason MacDonald said in an email.
The latest allegations about CSEC show the agency "continues to act in an unrestrained and unaccountable way," said the British Columbia Civil Liberties Association, which recently initiated a lawsuit against CSEC alleging Charter of Rights violations.
In its story on the 2009 G20 summit, the Guardian said special Internet cafes were set up, allowing authorities to install an email interception program and key-logging software to spy on delegates' computer use. In addition, a team of analysts had access to summaries of phone calls.
The Turkish finance minister and Russian leader Dmitry Medvedev were singled out for special attention, the paper reported, and it appears information was passed to British cabinet ministers.
"Delivered messages to analysts during the G20 in near real-time," reads the slide with the CSEC logo.
"Provided timely information to UK ministers."
Other documents leaked by Snowden suggest CSEC once monitored Brazil's department of mines and energy.