China today denied US allegations that it "hijacked" highly sensitive internet traffic – including emails sent to and from US military websites – earlier this year.

A state-owned telecoms company in China had access to 15% of global internet traffic, including confidential emails from Nasa and the US army, for 18 minutes in April, according to an annual security report delivered to the US congress on Wednesday.

The report warned that the capture "could enable severe malicious activities" by China. The state-owned company accused of "hijacking" the encrypted information, China Telecom, today denied "any hijack of internet traffic".

Online security experts say the capture represents "one of the biggest hijacks" of sensitive information in the history of the internet.

Relations between China and the US – number one and two in the world, respectively, in terms of internet users – have long been fraught when it comes to the web.

Earlier this year US technology giant Google said it was to stop censoring results on its Chinese search engine, following a sophisticated and allegedly state-sponsored cyber attack directed at the company. China earlier accused the US of making "groundless accusations" about restrictions on internet freedom against the country.

The US report said that some 15% of global internet traffic was routed through Chinese servers earlier this year, prompting worries that the country now has access to sensitive correspondence from US government bodies. US commissioner Larry Wortzel raised concerns on Wednesday that China would now "get the internet addresses of everybody that communicated" with the US armed services' chiefs of staff.

The rerouting began at a smaller Chinese ISP called IDC China before being passed on to China Telecom, the report compiled by the US-China economic and security review commission claimed. Encrypted correspondence from the US senate, the department of defence and "many others" were among the huge amount of traffic captured by China.

Dmitri Alperovitch, a threat research analyst at internet security firm McAfee, said the capture "is one of the biggest – if not the biggest hijacks – we have ever seen".

"No one except China Telecom operators" know what happened to the traffic during those 18 minutes, Alperovitch added. "The possibilities are numerous and troubling, but definitive answers are unknown."