By Giuseppe Fonte and Alvise Armellini

ROME (Reuters) -Italy and Israeli spyware maker Paragon said they have ended contracts following allegations that the Italian government used the company's technology to hack the phones of critics, according to a parliamentary report on Monday and the company.

Both sides said they had severed ties, giving conflicting accounts that triggered widespread criticism from opposition parties in Italy, while the journalists' federation FNSI called on prosecutors to investigate to ascertain the facts.

An official with Meta's WhatsApp chat service said in January that the spyware had targeted scores of users, including, in Italy, a journalist and members of the Mediterranea migrant sea rescue charity critical of Prime Minister Giorgia Meloni.

The government said in February that seven Italian mobile phone users had been targeted by the spyware. At that time the government denied any involvement in illicit activities and said it had asked the National Cybersecurity Agency to look into the affair.

A report from the parliamentary committee on security, COPASIR, said on Monday that Italian intelligence services had initially put on hold and then ended their contract with Paragon following a media outcry.

It was unclear when the contract was ended. However, COPASIR recalled that, addressing parliament on February 12, the government had said that it was still in place.

The committee also added it found no evidence that Francesco Cancellato, a reported target and editor of investigative website Fanpage, had been put under surveillance using Paragon's spyware, as he had alleged to Reuters and other media outlets.

In a statement quoted by Fanpage, Paragon said it stopped providing spyware to Italy when Cancellato's alleged involvement became public, and said the government declined an offer to jointly investigate whether and how he was spied upon.

The company did not reply to requests for comment from Reuters.

Opposition politicians called on the government to clarify the matter in parliament. Meloni's office declined to comment.

The COPASIR report said Italy's domestic and foreign intelligence agencies activated contracts with Paragon in 2023 and 2024 respectively and used it on a very limited number of people, with permission from a prosecutor.

The foreign intelligence agency used the spyware to search for fugitives, counter illegal immigration, alleged terrorism, organised crime, fuel smuggling and counter-espionage and internal security activities, COPASIR said.

It added that members of the Mediterranea charity were spied on "not as human rights activists, but in reference to their activities potentially related to irregular immigration", with permission from the government.

Undersecretary Alfredo Mantovano, Meloni's point man on intelligence matters, authorised the use of Paragon spyware on Mediterranea activists Luca Casarini and Beppe Caccia on September 5, 2024, the report said.

Mantovano was not immediately available for comment.

A Sicilian judge last month ordered six members of Mediterranea, including Casarini and Caccia, to stand trial on accusations of aiding illegal immigration, the first time crew members of a rescue vessel have faced such prosecution. All have denied wrongdoing.

(Editing by Timothy Heritage and Frances Kerry)