Ms Brittain, the Guardian's deputy foreign editor, used the money to pay the legal bills for Kojo Tsikata, the former head of internal security in Ghana, one of her closest friends for almost 20 years. She suggested Mr Tsikata should sue The Independent - and introduced him to Bindman & Partners libel lawyers - following the publication of an article which referred to the murder of three Ghanaian high court judges in 1982. When legal bills were presented, sources say, she wrote personal cheques to cover them.
What she did not know, however, was that her bank details had been secretly given to Libyan contacts. She believed all the money arriving in her account was from Mr Tsikata but most of it is reported to have originated from Libya. The Guardian said she would not be disciplined for her role.
Ms Brittain's involvement in the lawsuit was revealed two days ago when David Shayler, a former MI5 officer, told the Mail on Sunday that the payments into her bank account had triggered a surveillance and bugging operation in 1994 because intelligence operatives wrongly believed it was part of a Libyan money-laundering operation. When they realised the operation was simply intended to bankroll a legal action, the surveillance was halted.
In a statement from Bindman & Partners issued on Sunday, Ms Brittain said she never knowingly received any money from Libyan sources. A Guardian spokeswoman confirmed last night that Ms Brittain's bank statements did not identify the source of payments into her account. She said it was not in dispute, however, that moneys had been paid into and out of her account to fund the libel action.
Had her bank statements been more comprehensive, Mr Shayler told The Independent yesterday, they would have shown that five of seven payments from September 1993 to February 1995 had Libyan connections.
They comprise three transfers of pounds 34,890 each from the Libyan Interest Section account at the Libyan Arab Foreign Bank on 15 December 1994, 1 January 1995 and 2 February 1995; and two more - one for pounds 60,000 and another for pounds 50,000 - are understood to originate from two Credit Lyonnais accounts held by Khalifa Ahmed Bazelya, the former head of the Libyan interest section at the Saudi Arabian embassy in London.
Other payments which did not appear to originate from Mr Tsikata include one for pounds 48,989 from Kojo Amoo-Gottfried, the former Ghanaian ambassador to Peking, in November 1994, and pounds 10,000 from a Yousif Ibrahim in December 1994.
She has satisfied Alan Rusbridger, her editor, that she was acting "innocently" in a personal capacity and so will not face disciplinary action. She has allowed Mr Tsikata to pay sums of money into her account for many years. It is understood he had a child at public school in England and did not want to pay fees directly to the school.
The use of her account for the legal action is being seen at The Guardian as an extension of that arrangement. A spokeswoman at the newspaper refused to comment on the appropriateness of one of its senior executives becoming involved in a libel action against another publication.
Mr Tsikata sued the publishers of The Independent after a report in 1992 about a public inquiry into the execution of the judges. The Court of Appeal upheld The Independent's argument that a fair and accurate report of the inquiry's proceedings was covered by qualified privilege. Last month, Mr Tsikata was refused leave to appeal against this decision at the House of Lords. His solicitors intend to proceed to trial with the argument that The Independent's publication of the report was "malicious".
Ms Brittain is seeking legal advice over the possibility of suing MI5.