Germany’s telecommunications watchdog has banned the My Friend Cayla doll over concerns that it is a concealed transmitting device.

The Federal Network Agency has urged parents to disable or destroy the interactive toy because it could be used as for illegal surveillance.

My Friend Cayla doll, which is manufactured by the US company Genesis Toys and distributed in Europe by Guildford-based Vivid Toy Group, contains an app which can record and recognise speech.

The watchdog announced that it now classifies the Cayla doll as an “illegal espionage apparatus.” This means that owners and retailers could face fines if they fail to disable toy’s wireless connection or continue to stock them.

Under German law it is illegal to manufacture, sell or possess surveillance devices that are disguised as a different object.

The Federal Network Agency’s president, Jochen Homann, said in a statement: “Items that conceal cameras or microphones and that are capable of transmitting a signal, and therefore can transmit data without detection, compromise people’s privacy.

“This applies in particular to children’s toys. The Cayla doll has been banned in Germany. This is also to protect the most vulnerable in our society.

“Anything the child says or other people’s conversations can be recorded and transmitted without the parents’ knowledge. A company could also use the toy to advertise directly to the child or the parents.”

The German ruling came after Stefan Hessel, a student at Saarbrücken University, raised legal concerns about the device in My Friend Cayla.

Hessel told Saarbrücker Zeitung: “Access to the doll is completely unsecured.”

The student said that hackers with a bluetooth-enabled device could connect to Cayla’s speaker and microphone system from a distance of around 10m (33ft). He said that eavesdroppers would be able to listen in on whoever is playing with the doll.

The EU Commissioner for Justice, Consumers and Gender Equality, Vera Jourova, told the BBC: “I’m worried about the impact of connected dolls on children’s privacy and safety.”

The ruling could lead to EU-wide consequences for toy manufacturers. However, the UK Toy Retailers Association have said that Cayla “offers no special risk.”