Wikileaks founder Julian Assange is trying to broker a deal that would see US surveillance programme leaker Edward Snowden granted asylum in Iceland.
Mr Assange said he had been in touch with lawyers for Mr Snowden, who fled to Hong Kong before the scandal broke.
Iceland’s PM said "informal discussions" had been held with an intermediary of the ex-CIA contractor.
But Sigmundur David Gunnlaugsson said Mr Snowden, 29, would need to be in Iceland to apply for asylum.
Mr Snowden, who most recently worked as a contract computer technician for the National Security Agency (NSA), the US electronic spying agency, has vowed to fight any extradition attempts by the US.
The US has yet to file a formal request for his extradition from the Chinese territory.
The leaks, published in a series of articles this month in The Guardian and Washington Post newspapers, revealed that US agencies had systematically gathered vast amounts of phone and web data.
"We are in touch with Mr Snowden’s legal team and have been, are involved, in the process of brokering his asylum in Iceland," said Mr Assange in a conference call from the Ecuadorean embassy in London, where he himself is fighting extradition to Sweden.