By BENEDICT BROGAN

Last updated at 10:28 07 November 2007

The head of MI5 has sensationally accused Russia and China of undermining the fight against terrorism by running Cold War espionage operations in Britain.

Jonathan Evans voiced "disappointment" that his agents are having to track spies from major countries that are diplomatic allies when they should be taking on Islamist extremists.

His decision to single out two of the world's most powerful nations caused anger at the Foreign Office and is likely to trigger outrage in Moscow and Beijing.

Relations with Russia are in the deep freeze following last summer's diplomatic row that saw London expel four suspected spies after Moscow refused to extradite the chief suspect in the murder of former KGB agent Alexander Litvinenko.

Tit for tat expulsions, followed by threats from Moscow politicians and shows of strength near British airspace by Russian bombers, have cast a pall over the Government's relations with the regime of president Vladimir Putin.

The decision by the head of the MI5 to single out Russia and China is understood to have caused consternation at the Foreign Office. It could deal a blow to Gordon Brown's hopes to visit Beijing in the New Year.

But Mr Evans, who took over as director general of Security Service earlier this year, is frustrated by the way his overstretched resources are being diverted by the volume of spy activity by Russian and Chinese agents.

He is also concerned by the potential "reputational hit" to Britain if allies such as the United States come to believe the UK is unable to protect high-value economic secrets.

The Russian ambassador was summoned to the Foreign Office in the summer for a diplomatic "carpeting" over the networks being run out of his office. Four of his diplomats were expelled, all said by sources to be agents of the FSB - the successor to the KGB.

More than 30 intelligence officers working under diplomatic cover in London are blamed for what Mr Evans said was a level of activity that had not diminished since the end of the Cold War nearly 20 years ago.

In his first public speech since taking over the job earlier this year, Mr Evans said: "This year, yet again, there have been high levels of covert activity by foreign intelligence organisations in our country.

"Since the end of the Cold War we have seen no decrease in the numbers of undeclared Russian intelligence officers in the UK - at the Russian Embassy and associated organisations conducting covert activity in this country.

"So despite the Cold War ending nearly two decades ago, my Service is still expending resources to defend the UK against unreconstructed attempts by Russia, China and others, to spy on us.

"A number of countries continue to devote considerable time and energy trying to steal our sensitive technology on civilian and military projects, and trying to obtain political and economic intelligence at our expense.

"They do not only use traditional methods to collect intelligence but increasingly deploy sophisticated technical attacks, using the internet to penetrate computer networks.

"It is a matter of some disappointment to me that I still have to devote significant amounts of equipment, money and staff to countering this threat. They are resources which I would far rather devote to countering the threat from international terrorism - a threat to the whole international community, not just the UK."

Mr Evans is said to be personally frustrated that money, personnel and equipment is being "wasted" pursuing foreign spies when it should be devoted to tracking al-Qaeda.

Russian spies are known to be focused on acquiring military and industrial secrets, with a particular focus on science and technology.

They specifically target major companies in the defence field such as Rolls Royce, BAe and other companies at the cutting edge of technology, as well as Whitehall departments.

Using techniques that have little changed since the days of the Cold War, they seek to cultivate executives and officials using money and other inducements.

Whereas Russia often relies on undercover spies stationed in London as diplomats who are immune from prosecution, it is understood the Chinese operate differently, prefering agents who come to the UK under cover as businessmen, academics and students.

They "hoover up" any information they can get hold of, and then analyse it back in China for any intelligence it may offer. "The Chinese have a lower threshhold for what qualifies as intelligence and don't target in the same way," one source said.