Hackney Council says GCHQ could be fined after it marked out job adverts on pavements in the London borough.
The authority says it didn't give permission for the spy agency to create the words on streets around Shoreditch.
The adverts said "GCH-WHO? Technical opportunities" and include a website address.
"If we get evidence that any of these adverts are definitely in Hackney we will take enforcement action," Hackney Council said in a statement.
"[That] can include forcing the company to clean it up and fining them. This is something we have done in the past and will continue to do."
Intelligence service GCHQ used reverse graffiti for the adverts, which means the words were created by cleaning the pavement using a stencil and pressure washer - not using spray paint.
Hackney Council's graffiti policy says organisations have to ask for permission first.
"The council does not consent to any painting, writing, soiling, marking or other defacement on its property including footways without its prior express permission being obtained."
They were also spotted in Manchester, Birmingham, Wolverhampton and Leeds.
GCHQ says it was led to believe that it could put adverts on pavements in Hackney.
"GCHQ uses innovative methods to reach its target audience," a spokesperson said.
"It employs a contractor to approach councils for permission to carry out recruitment methods such as clean graffiti.
In this instance, Hackney Borough Council were approached for permission to use non-chemical clean graffiti in their area.
GCHQ understands that Hackney Borough Council's reply contained limitations on using clean graffiti on street furniture, not pavements."
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