Mr Shayler, 32, was arrested in a bar in the French capital on Saturday night, amid reports that he was threatening to publish details of British espionage operations on the Internet.
The Home Office said he was detained at the request of the British government, and that a formal request would be made for him to be extradited to stand trial on charges of revealing state secrets.
A spokeswoman denied that the move was connected to reports in early editions of the Sunday Times, which appeared on Saturday night, claiming that he planned to publish details of an alleged MI6 plot to blow up Colonel Muammar Gaddafi, the Libyan leader.
Mr Shayler fled across the Channel last year after making a series of sensational disclosures in a Sunday newspaper about the work of the intelligence services. He said that MI5 maintained files on ministers such as Jack Straw and Peter Mandelson when they were student activists. He also claimed that intelligence about a planned bomb attack on the Israeli embassy in London was not passed on.
Mr Shayler was remanded to the Prison de la Sante, the main jail in Paris, yesterday, after appearing before Isabelle Chauvin, the French public prosecutor in charge of the case. He will stay there until a decision has been made on whether to extradite him to Britain, which could take months.
His lawyer, John Wadham, said he would fight extradition proceedings. He predicted that no jury would convict Mr Shayler if he did end up standing trial, saying all his disclosures had been in the public interest.
"Here's what he revealed: there's a file on Peter Mandelson, there's a file on Jack Straw, they messed up this, they messed up that," Mr Wadham, director of the civil rights group Liberty, told BBC Television's Breakfast with Frost. "Do you think 12 ordinary people are going to put him in prison?" he asked. "I doubt it."
Confidential letters between Liberty and government lawyers, which have been seen by The Independent, reveal that the arrest followed the breakdown of lengthy negotiations to guarantee Mr Shayler some form of immunity from prosecution if he returned home voluntarily.
Mr Shayler, who had gone to the bar near his hotel in the St Germain area of Paris to watch a football match, was detained by three plain-clothes officers.
Mme Chauvin, deputy public prosecutor at the Parquet de Paris, the French public prosecutions office, said in a statement: "Mr David Shayler has been remanded in custody ahead of extradition proceedings. He is the subject of a process under French law in which a request from the British authorities for extradition will be considered and then a decision made."
Mr Shayler had travelled to Paris from the rural French farmhouse where he had been staying with his girlfriend, Annie Machon, another former MI5 officer. He had been due to give an interview to Breakfast with Frost yesterday morning.
The Home Office admitted that it had received a tip-off about the Sunday Times story at the end of last week. But the spokeswoman said: "The decision had already been taken for us to request an extradition."Reuse content