A private intelligence company has been engaged by police to secretly monitor internet and email use by activist and protest groups, a report says.

The company was hired to monitor and report on the internet activities of anti-war campaigners, animal rights activists, environmental campaigners, and other protest groups, Fairfax Media reported.

It was hired by Victorian Police, the Australian Federal Police and the federal Attorney-General's department.

The Melbourne-based firm has for the past five years monitored websites, online chat rooms, social networking sites, email lists and bulletin boards, the report said.

It has gathered intelligence on planned protests and other activities, and many of those on the watch list have broken no laws, the report said.

It also prepared threat assessments and intelligence reports for government agencies that included material from media reports, speeches, academic journals and publicly available company data, but no private correspondence was monitored.

The company was not named at the request of its management for fear extremists may target the firm.

The news comes a month after Victorian police were found to have targeted community and activist groups in a long-running covert operation.