A new law allows authorities to spy on the digital and mobile communications of anyone linked to a suspected terrorist enquiry, without prior authorisation from a judge, and forces Internet Service Providers (ISPs) and phone companies to give up data upon request.
Civil rights groups have criticised the measures but Valls said they were necessary because France had never faced a greater threat.
"There cannot be a lawless zone in the digital space," he said, "because we often cannot predict the threat, the services must have the power to react quickly."
Intelligence services will have the right to place cameras and recording devices in private dwellings and install "keylogger" devices that record every key stroke on a targeted computer.
The authorities will have the right to keep recordings for a month, and metadata for five years.
Valls sought to allay fears that the law was a French version of the "Patriot Act", which was introduced by the United States in response to the attacks on September 11, 2001, giving intelligence agencies broad powers to spy on its citizens.
Procedures will be "precisely defined", any request for data will have to be "justified" and decisions to begin surveillance will be taken personally by the prime minister and will be for a limited time.
"It in no way allows a generalised surveillance of citizens," said Valls.
"Everyone can express their concerns, but our responsibility is to fight terrorism in the most effective way possible."
France is one of the last Western countries to pass comprehensive legislation governing modern surveillance, still using a 1991 law passed before the use of Internet.
But civil liberties activists have heavily criticised the bill.
"We are putting in place a system that is potentially killing freedom, said the head of the country's Human Rights League, Pierre Tartakowsky, adding "On the pretext of improving surveillance, we are sacrificing individual liberties."
However, polls show that the French want to step up surveillance in the wake of the January attacks when terrorists killed 17 people.
An Ipsos survey for Europe 1 radio station and Le Monde daily at the end of January showed 71 percent of people were in favour of general bugging without the need to get a warrant from a judge.