Italian prosecutors have suggested for the first time that a man accused of being one of the world’s most-wanted people smugglers may in fact be the victim of mistaken identity, in an embarrassing blow to a high-profile investigation led by Britain’s National Crime Agency.

In June, Italian and British officials claimed to have helped arrest Medhanie Yehdego Mered, one of the alleged masterminds behind the smuggling of thousands of people from north Africa to Europe.

After being extradited from Sudan to Italy, the alleged smuggler faced two prosecutions, first in Sicily and then in Rome, despite a series of Guardian articles that revealed doubts about the identity of the man in custody.

Six months later, some of the prosecutors have suggested that the wrong man may have been arrested, after the prosecution team in Rome broke ranks with their Sicilian colleagues. In a 23-page document submitted to court officials, the Rome prosecutors wrote: “This prosecution office have good grounds to state that the real physical aspect of Medhanie Yehdego Mered is the one shown in the attached photo,” referring to a picture of a man who differs substantially in appearance to the man in custody in Sicily.

To bolster their argument, the Rome prosecutors then cited testimony by a prosecution witness, an alleged former customer of Mered, who said the man in the photograph was the real smuggler, rather than the man on trial in Sicily. According to the prosecutors’ document, Seifu Haile, 28, said: “This is Medhanie [Mered]. He is the king in Libya, very respected by everyone.”

The document corroborates reporting by the Guardian, which suggests that the man in custody is in fact Medhanie Tesfarmariam Berhe, an Eritrean refugee with no connection to Mered’s alleged business. The Guardian has previously published testimony from other alleged Mered customers, all of whom said the Italian and British police had made a mistake. Mered has himself also said in Facebook messages published by the Guardian that the wrong man is on trial in his place.

The news causes considerable embarrassment for Britain’s NCA, GCHQ, and the Foreign and Commonwealth Office, all of whom played a part in the alleged smuggler’s arrest. Court documents show that the NCA’s representative in north Africa, Roy Godding, played a key role in the extradition, while the NCA boasted on its website in June that it had tracked Mered to an address in Khartoum. At the time, the FCO said its own role was crucial to proceedings.

Berhe remains in custody until at least 10 January, while a Sicilian court assesses the Rome prosecutors’ claims, which have been contested by their Sicilian counterparts. Asked about the case by the Guardian, the Sicilian prosecutors refused to comment.

The NCA said it was “confident in our intelligence”.

Berhe’s lawyer Michele Calantropo said: “The prosecutors in Palermo have [contested] the document produced by their colleagues in Rome. It’s very bizarre. And in the meantime an innocent man is going to spend Christmas in jail.”

On Monday, an Italian MP spoke out about the case for the first time, and announced a parliamentary inquiry. Erasmo Palazzotto, a leftwing MP and vice-president of the national commission for foreign affairs, said he hoped the inquiry would “accelerate the investigation and make sure that we are not keeping in jail an innocent man that might be the victim of a mistaken identity”.