He was also employed as a parliamentary researcher for Alicia Kearns, chairwoman of the influential foreign affairs committee of MPs, the sources said.

The alleged spy was arrested on suspicion of violating Britain’s Official Secrets Act in Edinburgh in March and a second man was arrested in Oxfordshire at the same time, according to the Metropolitan Police.

Hong Kong resident ‘posed as philanthropist’ to spy on China for US

Both men have been released on bail until a date in October and neither has been formally charged, according to police.

The investigation is ongoing, so the Met has not provided details of what activities the men have been accused of undertaking. In cases of this kind, few details emerge before a person is formally charged.

The Sunday Times first reported over the weekend that the researcher had been arrested on suspicion of spying for China.

The story dominated media rounds on Monday morning. The Times followed up with a story naming the individual in question on Monday after backbench MPs threatened to use parliamentary privilege to name him without fear of being sued.

On Monday, the Press Association reported that the researcher said he was “completely innocent”, citing a statement released by his lawyers.

“The reality of a Chinese spy in the UK Parliament is a moment to think again about our policy. When Rishi Sunak became Prime Minister he referred to China as a ‘systemic threat’ to the UK and our interests. Since then this has been significantly watered down,” said Iain Duncan Smith, the former Conservative Party leader who has become the most prominent China hawk in the country.

Appearing on Sky News on Monday, the Business Secretary Kemi Badenoch urged a more cautious response, saying that “we certainly should not be describing China as a foe”, when asked if China should be considered a threat.

“Chinese people are different from the Chinese government. It is important to be diplomatic, we shouldn’t be using language that makes people scared,” Badenoch said.

“The group he was working for was not for a pro-China group, so it will be quite interesting to understand when the investigation is over how this all came about.”

According to BBC News, it was “the first substantive issue raised in the discussion by Rishi Sunak, in a meeting lasting around 20 minutes and described by a source on the British side as ‘business-like’”.

Chinese and British leaders meet, hours after ‘spy’ arrest claim

“And the right of members to speak their minds without fear or sanction must be maintained. We will defend our democracy – and our security. So, I was emphatic with Premier Li that actions which seek to undermine British democracy are completely unacceptable and will never be tolerated,” he said.

The Chinese foreign ministry dismissed the accusations on Monday as “completely fabricated” and a “political stunt”.

“We urge the UK side to stop spreading fake information and stop the anti-China political manipulation and malicious slander,” the ministry’s spokeswoman Mao Ning said.

In an earlier statement, the Chinese embassy in London urged “relevant parties to stop anti-China political manipulation and putting on such self-staged political farce”.

On Monday, House of Commons Speaker Lindsay Hoyle said parliament used the same vetting procedures as the government and was seeking to address any security concerns raised by the media.

“We keep our security arrangements under review at all times in order to deal with the evolving threats. The small number of people that needed to know were immediately briefed on a confidential basis,” he said.

Hoyle also discouraged MPs from discussing security issues, including the details of the investigation, in parliament.

“Commenting on the identities of those alleged to be involved, engaging in speculation about the case and discussing other details runs a serious risk of prejudicing any future prosecutions,” Hoyle said. “The comments made in the media were unhelpful.”

In the Commons on Monday, Deputy Prime Minister Oliver Dowden defended the government’s approach to China, saying its “absolute priority” was to protect Britain from any activity by a foreign state that “seeks to undermine our national security, prosperity and democratic values”.

Several China hawks in Parliament renewed their calls on Monday for the government to label Beijing a threat.

“My anxiety is we still flip-flop all over the place … we’ve seen foreign secretaries one moment wanting to suck up to China and the next minute wanting to have robust words with China,” said Chris Bryant, a Labour MP. “It simply doesn’t work. Why oh why have we still not declared China is a threat to UK national security?”

Dowden said the UK government had been “consistent” in its approach to Beijing.

“We must engage with the Chinese as we do with many, many other countries around the world with whom we do not share a number of their values,” Dowden said. “It is not a realistic position to take that we should entirely cut off from engagement with China. You should engage with China, but be absolutely clear about where we disagree with them and clear eyed in protecting our national security.”

The alleged spy taught at an international school in the Chinese city of Hangzhou through a British Council scheme.

British and China are talking but ‘irritants in the relationship will remain’

He subsequently completed a master’s degree in China and globalisation at King’s College London before securing a position at the China Research Group, a prominent organisation that has helped drive the debate on Beijing in Britain. He had a parliamentary pass as a result of his work for Kearns, an MP who has called for a more robust China policy.

The think tank has been painted as a more nuanced, policy-oriented companion to the tougher-talking Inter-Parliamentary Alliance on China (IPAC), an international group of cross-party legislators that has come out swinging since details of the arrest were published.

“The suspect was a figure hostile to IPAC’s work and not involved with IPAC in any way,” the group said in a statement on Saturday night. “We urge authorities to reveal the name of the suspect, so as to avoid casting a wide web of suspicion in a community already strained by the PRC’s transnational repression.”

Sunak’s government has called for the UK’s foreign policy approach on China to “evolve”, but not gone so far as to describe China as a “strategic threat” as some backbenchers have hoped.

In November, Ken McCallum, the director general of Britain’s domestic security agency MI5, called the Chinese Communist Party the “most game-changing” challenge Britain faces in a joint speech with FBI director Chris Wray.

In July, a damning report by an influential parliamentary committee said China had ruthlessly targeted Britain’s commercial and academic institutions and successive governments had been slow to recognise the threat posed by Beijing.