Senior Israeli diplomats believed that Adam Werritty was an official adviser to the Defence Secretary Liam Fox when the pair attended a top-level conference that discussed sanctions against Iran, i has learned.
Mr Werritty organised a dinner at the Herzliya conference in Israel last February for politicians and senior officials, attended by Mr Fox and Matthew Gould, the UK ambassador.
But he did it without any British diplomats in the country being involved in the arrangements, it is claimed.
Israeli officials said they were under the impression Mr Werritty was a senior adviser to the minister and he took part extensively in political discussions at Herzliya, advocating a tough stance against Iran.
A report by Ursula Brennan, the Ministry of Defence's most senior civil servant, revealed his presence at a meeting between Mr Fox and Mr Gould – before the latter took up his post in Tel Aviv – was unauthorised.
An Israeli official present at the conference said: "No one had any reason to doubt Adam Werritty was a senior adviser to Mr Fox. He was...arranging things and it seemed like something he had done many times before."
It also emerged yesterday that Tetra Strategy, a lobbying firm that introduced a client to Mr Werritty, also thought he was Mr Fox's adviser.
In a statement, it said: "Tetra introduced its client to Adam Werritty in March 2011, widely believed at the time to be an official adviser to Dr Liam Fox." The new revelations came as Mr Werritty was interviewed by Cabinet Office officials in an inquiry looking into his links to the minister.
Mr Werritty has had to provide the inquiry with a full list of his business interests and has been asked to detail all his income from defence sources.
The probe, led by Cabinet Secretary Sir Gus O'Donnell, is expected to conclude by the end of the month. Mr Werritty couldn't be reached for comment.