Shayler, who was staying in Paris, was handcuffed and taken away for questioning by French police on Saturday night at the request of the British authorities.
The arrest came as early editions of The Sunday Times reported that Shayler and another former intelligence officer, Richard Tomlinson, were threatening to publish details of British spying operations, in defiance of government injunctions.
The Home Office insisted last night there was no connection between the timing of Shayler's arrest and the newspaper's later report that he had been about to reveal a plot by British intelligence to blow up Libya's Colonel Gadaffi.
However, a spokeswoman revealed that the Home Office had received an early tip-off about the newspaper's story. She said: "We were informed at the end of last week about the stories. David Shayler was making allegations for a number of months and the decision had already been taken for us to request an extradition.
"This was part of the process which has happened to coincide with The Sunday Times story."
Scotland Yard confirmed Shayler had been arrested in connection with an ongoing investigation into a possible breach of the Official Secrets Act 1989, but a spokesman said he was unable to say how the arrest came about.
An executive at The Sunday Times last night dismissed any suggestion of a tip-off but was unable to comment further. Both the newspaper's editor and its managing editor were unavailable for comment.
But those close to Shayler, who has been on the run for nearly a year, said they suspected Sunday Times reporters could have been "instrumental" in his arrest.
Shayler's girlfriend, Annie Machon, told the BBC's Breakfast with Frost that he was arrested in a bar where he had gone to watch a football match.
Three police officers who later went to her room to get his passport told her he was being taken to the Ministry of the Interior.
She said she was "upset and also very angry" as Shayler was negotiating with the Attorney General over his return to Britain when he was arrested.
An M15 source was yesterday reported as saying that the agency had known about Shayler's whereabouts ever since he went public with his criticisms last year.
The Mail on Sunday, which covered Shayler's original revelations and his plans to launch his own Internet site two weeks ago, quoted the source as saying: "We had our ways of tracking him. But it was felt at the top floor that there would be less fuss if we left him to rot abroad rather than drag him back into the courts."
A High Court injunction bans publication of details of Shayler's claims in Britain.Reuse content