OTTAWA - The watchdog over CSIS says it's time to decide whether Canada should have a full-fledged foreign spy service.

In its annual report, the Security Intelligence Review Committee notes a worrisome expansion of CSIS' intelligence gathering.

The committee, which reports to Parliament, says it put the question of a dedicated foreign spy agency directly to Public Safety Minister Vic Toews in a secret study.

The Canadian Security Intelligence Service can operate anywhere in the world to collect information about threats to Canada, such as a brewing terrorist plot.

But CSIS is allowed to gather foreign intelligence -- for instance, details of another country's diplomatic intentions -- only within Canada's borders.

Still, the review committee says these distinct roles are blending together more frequently, due to greater demands for intelligence from the federal government. And that raises new concerns.

"If this were to continue, CSIS could become what Parliament never intended it to be: namely, a Service with equal security intelligence and foreign intelligence mandates," says the annual report.

It would not only "go against public arguments to the contrary," but also ignore the longstanding practice of respected allies such as the United States and Britain, which have handed foreign spying duties to stand-alone agencies, the CIA and MI6 respectively.

"This raises questions about whether there should be a dedicated foreign intelligence service in Canada, consistent with past thinking on the need to maintain a distinction between foreign and security intelligence," says the review committee report.

The committee argues for a public discussion on what Canadians expect of their intelligence agencies and on the "real risks and benefits" such work entails. It says that should include a look at what role is most appropriate for CSIS with respect to foreign intelligence and overseas activities.

The committee also urged CSIS to:

-- "reconsider" the resumption of exchanges of secret information with an unnamed foreign agency due to the risks involved, including possible human rights violations;

-- seek ministerial guidance on use of the technique known as disruption -- that is, defusing a national security threat by letting suspected terrorists or spies know they are under investigation with the aim of prompting them to drop their plans.

Toews' office said it was reviewing the report's recommendations with interest. CSIS had no immediate comment.

The Conservative government tabled the review committee report in Parliament so late in the day Monday that the committee chairman, Arthur Porter, had to cancel a planned interview on its findings.

It has become clear in recent years that CSIS has turned its attention abroad more often, working in Afghanistan to assist the Canadian military and openly musing about the possibility Canadian officials are under the thumb of foreign masters.

CSIS director Dick Fadden sparked anger earlier this year by revealing he was in the process of warning at least two provinces, through the Privy Council Office, that members of their cabinets had come under foreign influence.

He also said CSIS had suspicions about a number of municipal politicians in British Columbia.

Fadden was coy about the countries involved, but strongly hinted China posed concerns.

In March, The Canadian Press revealed CSIS' involvement in interviewing suspected Taliban fighters alongside military intelligence officers in Afghanistan.

CSIS has admitted interrogating up to 50 Afghan prisoners captured by the Canadian Forces, but insists they were never mistreated.

The spy service questioned Afghan detainees from 2002 through late 2007, when the military began to conduct interrogations without assistance, Michel Coulombe, CSIS assistant director for foreign collection, told the Commons special committee on Afghanistan in May.

CSIS carried out an internal review of its involvement with detainees for Toews, but the spy service has declined to discuss it.