Anthony Holland, who describes his work as an MI5 and MI6 "asset", claims that the MP was targeted because he was thought to be having a gay affair with the Tory peer Lord Robin Maugham, nephew of the author Somerset Maugham.
If true, his revelations will further embarrass the security services and result in calls for tighter controls on their activities. Last year, the Labour government was rocked to its core by the revelations of former MI5 officer David Shayler, who described surveillance operations on potential "enemies of the state" - who included John Lennon, several Labour MPs and a young Jack Straw, now the Home Secretary.
In Mr Holland's book, which is due to be published in the summer by a small Melbourne-based publisher, he describes operations in the United Kingdom, South Africa, Iran, Venezuela and Saudi Arabia. Working as a freelance agent for MI5 and MI6, Mr Holland, 54, claims his real skills as an engineer allowed him to be placed in sensitive areas by the security services.
During one period in 1969, he was found a job at the Rossing uranium mine in South West Africa in order to find out whom it was supplying. He says he reported that it was feeding the Israeli nuclear programme, and even describes one meeting he had with General Moshe Dayan, the Israeli defence minister.
"At that time, we were well aware what they were up to," Mr Holland claimed from his Melbourne home. "They weren't supposed to be developing their own bomb, but we helped them by turning a blind eye."
In Britain, his most audacious operation involved gathering evidence of the MP's alleged affair with Lord Maugham. He says the MP was regarded as a future minister and a potential security risk, although Mr Holland suspects the evidence was gathered to be used as leverage at a later date. Lord Maugham, who was openly homosexual, died in 1981.
The book, which is known only as "Project 21" at Geoff Coxon Publishing in Melbourne, describes how two addresses in London and Brighton, East Sussex, were put under round-the-clock surveillance. "By the time I joined the operation, most of the groundwork was done," Mr Holland says in the book.
"They [MI5] had Maugham's flat bugged throughout and the telephone tapped, and they had two miniature television cameras wired into the ceiling lights in the main bedroom and the lounge, so we could watch the show in comfort."
The former minister denied the affair when approached by The Independent this week. He said he had no knowledge of ever having been put under surveillance.
Other chapters include details of a spying operation that Mr Holland says he conducted on a German project to help Iran develop a nuclear weapon.
Mr Holland wrote the book as the latest stage in a campaign to clear his name of a crime he says he did not commit. He was jailed in 1981 at Bradford Crown Court for allegedly receiving stolen goods amounting to pounds 250. He claims that he was framed by the security services.
Although it was his first offence, he was jailed for 12 months. Before his term was over, however, he was freed and sent to a new life in Australia, allegedly with the complicity of MI6. Melvyn Hodgson, the man he allegedly persuaded to steal for him, was found hanging in a prison cell in 1992.
His case has been taken up by Australian politicians and is being examined by the Criminal Cases Review Commission.
Dr John Illingworth, a Leeds city councillor, has examined the evidence against Mr Holland and described it this week as "preposterous". He added: "I don't believe he would be convicted today. It is difficult to check the rest of the claims in the book, but those that can be checked are accurate."
Mr Holland said: "The only man who could clear me was Melvyn Hodgson because I believe he made a false confession. Once I heard he had been found hanging, I decided to blow the lid off these guys.
"I still don't know why they framed me, but I had been associating with a suspected IRA commander and perhaps they thought I was going over.
Once the book is published, I know I'll never be able to return to England. I just want to clear my name. I simply can't let them win."
Geoff Coxon, Mr Holland's publisher, is hoping to avoid the kind of legal fight that resulted in Peter Wright's book Spycatcher being dragged through the courts.
"If it is published in Australia, your Official Secrets Act does not apply," he said.
"We are publishing in Victoria because in New South Wales truth is a defence, and we have gone to great lengths to prove the veracity of Anthony's claims.
"You might have a bit of difficulty getting it over there, but if it goes well, we hope to launch it on the American market next year."
The Home Office said it would not comment until it had seen the material. It never discusses operational matters.Reuse content