Two of Britain's top cyber security experts have warned against ignoring Huawei, saying banning the Chinese telecommunications giant is not an option for the West.

Robert Hannigan, former director of Britain's intelligence and security organisation GCHQ, said with risks come rewards. ( ABC News )

"In the future there will be lots of technologies that we need where the best provider in the world and the best technology is Chinese," said Robert Hannigan, the former director of Britain's intelligence and security organisation GCHQ.

"What are we going to do about this?

"Are we going to cut ourselves off from this, or are we going to manage the risk?"

The answer, according to Mr Hannigan and Nigel Inkster — a 30-year veteran of the Secret Intelligence Service (MI6) — is to accept that with risks come rewards.

"What we need to do is look at this at the broader strategic context of who controls and dominates these technologies at a global level in the 21st century," Mr Inkster said.

Huawei entered the British market in 2001, and by 2005 had signed off on its first UK contract with BT (formerly British Telecom) as it embarked on a multi-billion-pound upgrade of its network.

"I think those in the intelligence and security community were from the outset aware of the problem that this relationship could cause," Mr Inkster said.

"But one has to bear in mind that … this was taking place in a different era, we were still in a kind of end-of-history moment.

"There was simply less awareness within government as a whole of these security issues, and frankly less of a disposition to take them particularly seriously."

The Cell

In 2010, the Huawei Cyber Security Evaluation Centre (HCSEC) was created — otherwise known as The Cell.

In a nondescript brown brick building in an industrial site 90 minutes north of London sits a team of cyber security experts, employed by Huawei and overseen by the British Government.

Positions advertised for the Banbury facility say Huawei is seeking those looking to build a "rewarding career in cyber security".

Their job is to ensure the integrity of Huawei's products, which include equipment used across the UK's fibre-optic network.

It is a model that has been suggested for Australia, to ease concerns about security to the critical national infrastructure.

But the July annual report from the board that oversees The Cell raised concerns, using language not seen in its three previous reports.

"Identification of shortcomings in Huawei's engineering processes have exposed new risks in the UK telecommunication networks and long-term challenges in mitigation and management," the report said.

"Due to areas of concern exposed through the proper functioning of the mitigation strategy and associated oversight mechanisms, the oversight board can provide only limited assurance that all risks to UK national security from Huawei's involvement in the UK's critical networks have been sufficiently mitigated."

The Huawei Cyber Security Evaluation Centre (HCSEC), otherwise known as The Cell. ( ABC News )

Its concerns were sent to the British Prime Minister's national security adviser.

"It looks like a bit of a warning shot has been fired by the UK Government," Mr Hannigan said, who until last year oversaw the board that issued the report.

"It's [The Cell] working up to a point, is the way I'd put it.

"The question is, what's the alternative? Is the alternative banning Huawei better? I don't think it is actually."

Huawei welcomed the UK report and the feedback.

"It confirms the collaborative approach adopted by Huawei, the UK Government and operators is working as designed, meeting obligations and providing unique, world-class network integrity assurance through ongoing risk management," a spokesperson for Huawei told the ABC.

"The report concludes that HCSEC's operational independence is both robust and effective."

Huawei insisted it was under more scrutiny than any other telco and The Cell had been proven as the best model for compliance.

The risk

But both Mr Inkster and Mr Hannigan agreed there were risks to dealing with Huawei.

"Huawei has relied very substantially on Chinese Government investment and technological assistance to develop rapidly to the point where they are," Mr Inkster said.

"And if the Chinese Government ask them to do something, they're not in the position to refuse.

"The challenge for those who simply want to ban it is, what's the alternative?" Mr Hannigan reiterated.

"The challenge for those who think they can manage it is — are you kidding yourselves?

"There is simply no magic solution."