Electronic spying tools used by the U.S. government could end up in the hands of organized criminals and hackers, further eroding Internet security, warned industry leaders who called for new restrictions and oversight of government activity.

"It is a big worry" that the methods will spread, said Andrew France, former deputy director of the UK's NSA equivalent, GCHQ, and now chief executive of security startup Darktrace.

The government habit of purchasing information about undisclosed holes in software is also "really troublesome," said former White House cyber security advisor Howard Schmidt. "There's collateral damage."

Both France and Schmidt spoke to Reuters at the annual RSA Conference, the world's largest cyber security gathering, in San Francisco last week. RSA is the security division of electronic storage maker of EMC Corp.

Security researchers say that secret state tools tend to fall into the hands of mobsters and eventually lone hackers. That trend could worsen after former spy contractor Edward Snowden disclosed U.S. National Security Agency capabilities for breaking into Cisco Systems Inc routers, Dell Inc computer servers and all kinds of personal computers and smartphones, industry leaders and experts warned at the RSA conference and two smaller gatherings in San Francisco convened partly to discuss RSA's government deals.
 
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