Britain has been forced to withdraw intelligence agents from operations because Russia and China have obtained access to secret information in files stolen by US whistleblower Edward Snowden, senior government sources have indicated.
The ex-National Security Agency contractor - now in Russia - has insisted that crucial data in the material could not be accessed by foreign powers but UK security chiefs have warned that his actions had compromised anti-terror activity.
In what was described by former GCHQ director Sir David Omand as a "huge strategic setback" for the West, it was reported that Moscow and Beijing had "cracked" information that exposed intelligence-gathering techniques and could identify individual spies.
A Downing Street source told the Sunday Times: "It is the case that Russians and Chinese have information. It has meant agents have had to be moved and that knowledge of how we operate has stopped us getting vital information."
They said there was "no evidence of anyone being harmed" as a result.
Snowden triggered a wave of controversy when he leaked tens of thousands of documents about surveillance programmes run by the NSA and foreign counterparts, including Britain's GCHQ, in 2013.
He fled to Hong Kong where he met journalists to co-ordinate a series of articles that exposed mass surveillance programmes such as the NSA's Prism and GCHQ's Tempora, which involve "hoovering up" vast volumes of private communications.
Once Snowden's identity was revealed, he fled to Russia, and he remains wanted by the US authorities.
The revelation came with renewed focus on spy agencies' powers to collect communications data in bulk, after a review - commissioned in the wake of the Snowden revelations - said the framework was "undemocratic" and must be entirely rewritten.
Terror laws watchdog David Anderson called for security services and police to keep intrusive powers to combat terrorism and serious crime but urged the Government to draw up "comprehensive and comprehensible" new legislation - including switching authorisation from ministers to judges.
The newspaper quoted a senior Home Office source as saying: "(Russian president Vladimir) Putin didn't give him asylum for nothing. His documents were encrypted but they weren't completely secure and we have now seen our agents and assets being targeted."
A British intelligence source was quoted as saying: "We know Russia and China have access to Snowden's material and will be going through it for years to come, searching for clues to identify potential targets.
"Snowden has done incalculable damage. In some cases the agencies have been forced to intervene and lift their agents from operations to prevent them from being identified and killed."
Sir David said: "I am not at all surprised that people are being pulled back and operations where people are exposed are having to be shut down, at least for the moment."