|The government is accused of installing spyware on dissidents' computers|
The New York-based rights group accuses the government of trying to silence dissent, using software and kit sold by European and Chinese firms.
The report says the firms may be guilty of colluding in oppression.
An Ethiopian government spokesman, quoted by AFP, dismissed the report as a part of a smear campaign.
Security officials have virtually unlimited access to the call records of all telephone users in Ethiopia”
Human Rights Watch
"There is nothing new to respond to," Ethiopian Information Minister Redwan Hussein told the agency.
Human Rights Watch (HRW) says its report is based on more than 100 interviews with victims of abuses and former intelligence officials, conducted between September 2012 and February this year.
Rights groups frequently accuse the Ethiopian government of cracking down on opposition activists and journalists.
The government denies the claims.
All phone and internet connections in Ethiopia are provided by a state-owned company. According to HRW, this has given the government unchecked power to monitor communications.
"Security officials have virtually unlimited access to the call records of all telephone users in Ethiopia," the report said. "They regularly and easily record phone calls without any legal process or oversight."
Recorded conversations are also alleged to have featured in abusive interrogations of suspected dissidents.
The technology used by to monitor the communications is said to have been provided by companies based in China, the UK, Italy and Germany.
"The foreign firms that are providing products and services that facilitate Ethiopia's illegal surveillance are risking complicity in rights abuses," HRW's business and human rights director, Arvind Ganesan, said.
According to the report, the government has extended its surveillance to Ethiopians living overseas.
Ethiopians living in the UK and the US have accused the authorities in Addis Ababa of planting spy software on their computers.
Both countries have been urged to investigate the claims, on the grounds that they may have violated domestic laws against invasions of privacy.
HRW says the firms that sell surveillance technology to governments also have a duty to ensure that their products are not helping to suppress human rights.
"The makers of these tools should take immediate steps to address their misuse," Mr Ganesan said.