Solicitors acting for Leeson, 31, who is serving a six-and-a-half-year sentence in Singapore's Changi prison for the financial scams that brought down Barings Bank, said cancer had been detected in his colon and had spread to his lymph nodes.
A statement issued on behalf of his former wife, Lisa, 30, who was married to Leeson throughout the affair, said: "We are in deep shock and our thoughts at this time are with Nick and his family. As can be imagined, Mr Leeson's family and that of his ex-wife Lisa are devastated at the news."
Leeson's former wife, who now uses her maiden name, Sims, has not seen him for a year. Last night she cancelled her planned marriage to another man which had been due to take place in Kent later this month. Leeson shot to notoriety in 1995 after a series of unauthorised currency gambles on the Singapore International Monetary Exchange (Simex) using money from his employers, Barings. His actions lost the bankers pounds 860m and brought about the collapse of the bank.
Initially Leeson and his wife went into hiding - first in Indonesia and then in Brunei. They were both eventually arrested in Frankfurt on their way back to Britain and Leeson was convicted for fraud.
Miss Sims said she would stand by her husband, and in a much-publicised move took up a job with Virgin Atlantic airline as a stewardess.
The couple began to lose contact in 1996 and they were divorced last year.
It is said that the last straw in their relationship had been reading her husband's account of the affair, Rogue Trader, in which he bragged of his rise to the top of the banking world.
"I was the rising star and we were driven to make profits, profits and more profits," he wrote.
Leeson's solicitor, Stephen Pollard, said yesterday: "All that I know about Mr Leeson's illness is that he has been diagnosed with cancer of the colon and that the cancer has spread to the lymph nodes.
"It is anticipated that he may know more about the prognosis next week and when we have more news this will be released."
Leeson is understood to have been moved to the hospital wing of the prison, where he is waiting return to Britain to complete his sentence.
His father, William, yesterday said the prison had not been a factor in his son's illness. "The jail is A1. It is as good as gold," he said.
Officials from the British High Commission in Singapore have been visiting Leeson in an effort to monitor his condition.
Yesterday a spokesman said he was "seriously ill" and that an application was being made for his early release on compassionate grounds.
While pardons can only be made by the Singaporean president, Ong Teng Cheong, who himself is suffering from cancer, the prison said yesterday that any pleas based on extreme illness would be considered as quickly as possible.
The story of Leeson and Miss Sims has been made into a film starring Ewan McGregor, of Trainspotting fame, and Anna Friel, formerly of television's Brookside. A spokesman for Granada Films said it was still being edited. The film had not yet found a distributor, but was still due for release next year. Asked whether Leeson's illness might make any difference to release dates, he added: "That's like looking in a crystal ball. Things could change."Reuse content