It could have been straight out of a Cold War spy thriller: the claim that British agents had hidden a transmitter inside a fake rock left on a Moscow Street.

Now, Jonathan Powell, former chief of staff to Tony Blair, has admitted that the 2006 allegations were true. Appearing in a BBC documentary series, Putin, Russia and the West, he said:

The spy rock was embarrassing. They had us bang to rights. Clearly they had known about it for some time and had been saving it up for a political purpose.

The rock, just 30cm wide, grew to Gibraltar-sized proportions when it sparked a diplomatic row after Russian TV broadcast the story six years ago.

In scenes with clear echoes of Ian Fleming and John le Carré, the report included a video of a man slowing his pace and looking down at the rock (with some seriously shifty eyes), before walking quickly away. Other videos included a man kicking the rock, and a different man walking past and picking it up. The broadcast showed that the rock was hollowed out and filled with circuitry, a device of such crude simplicity that it seemed unrealistic.

The Russian security service, the FSB, alleged that Britain was making secret payments to pro-democracy and human rights groups in Russia. Soon after the incident, there was a clampdown on foreign funding for these groups and many went under.

Tony Blair downplayed the affair at the time, playing on its almost farcical nature by attempting to laugh it off. "I think the less said about that, the better," he told journalists, smiling.

Yet he was careful not to deny it outright. At a news conference, he said:

Look I only saw myself on Teletext this morning, the business about Russia. I'm afraid you're going to get the old stock-in-trade, of never commenting on security matters. Except when we want to, obviously.

Although the UK was cagey on the rock itself, the Foreign Office was unequivocal in its denial of any improper conduct with NGOs in Russia, saying that all their contributions were entirely above board. Of course, there are plenty of other reasons Britain might want to spy on Russia: it's nuclear and military intentions, its dealings with Iran and Iraq, and its geopolitical use of gas resources.

Shortly before "rock-gate", MI6 launched a new recruitment website, saying: "Whether you have the skills to design hi-tech gadgets or deploy them in a hostile environment, SIS may have the career for you". One wonders whether the recruitment drive has resulted in any improvements in technology.