Britain is building a cyber deterrent to ward off attacks from states like China, Iran and Russia, a Parliamentary committee has disclosed.

GCHQ and the Ministry of Defence are building offensive cyber weapons including “high-end” tools that could be used to counter attack or threaten retaliation against other states.

Recent years have seen a “step change” in Britain’s development of the weapons and efforts by the UK’s electronic spy agency had increased “very substantially”, Parliament’s Intelligence and Security Committee (ISC) said.

An annual report by the committee which scrutinises the work of UK spy agencies also raised fears that Islamic State group may be able to hack Britain’s water supply, electrical grid and telecommunication systems using cyber weapons for sale on the web.

GCHQ officials told the committee that the National Offensive Cyber Programme begun in 2014 was “on a different scale” to previous efforts.