Britain’s phone and internet network is at risk because of “shortcomings” in a Chinese company that has been allowed to set up in the UK, Britain’s spies are warning.

A Government report into Huawei's broadband and mobile infrastructure equipment has concluded that it has "only limited assurance" that the kit poses no threat to national security.

Huawei is the world's biggest producer of telecoms equipment and is a major supplier of broadband and mobile network gear in Britain.

The report was written by the Huawei Cyber Security Evaluation Centre (HCSEC), which was set up in 2010 in response to concerns that BT and others' use of the firm's equipment could pose a threat. It reports to the National Cyber Security Centre which is part of GCHQ, the Government's listening post.

In its latest report, the HCSEC's oversight board warned that “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”.