His name has not been confirmed by US authorities but was divulged yesterday by US newspapers, which said he was interrogated by the FBI for three days after failing a lie-detector test last week.
According to The New York Times, the Taiwanese-born computer scientist, who is in his fifties, "stonewalled" and failed to co-operate with his questioners. The FBI said that they did not have enough evidence to arrest him.
However, the US Energy Secretary, Bill Richardson, in whose jurisdiction Los Alamos falls, said he believed there was enough evidence to dismiss Mr Lee, citing his "failure to properly notify Energy Department and laboratory officials about contacts with people from a sensitive country, specific instances of failing to properly safeguard classified material, and apparently attempting to deceive lab officials about security matters".
Wen Ho Lee had emerged as the chief suspect from a three-year FBI investigation, code-named Kindred Spirit, into the presumed theft of US nuclear secrets from Los Alamos. His identification yesterday came hard on the heels of an announcement that as many as 700 Energy Department staff and employees of the National Laboratory at Los Alamos would have to take regular lie detector tests.
The measure was seen as a belated attempt by the administration to calm fears about the scale of Chinese spying in the United States.
Wen Ho Lee's wife, Sylvia, is also said to be under suspicion. She worked as a secretary at the Los Alamos laboratory until recently, and reportedly raised eyebrows in the Eighties when she was invited to China to deliver an academic paper on nuclear processing. She was also said to have taken an undue interest in visiting Chinese delegations.
A New York Times investigation, published on Saturday, said that China was suspected of having developed miniaturised nuclear warheads on the basis of blueprints stolen from Los Alamos in the mid-Eighties, thereby clawing back much of a 20-year technology gap with the United States.
While noting that the security lapse - if such it was - took place under Presidents Reagan and Bush, the paper accused the Clinton administration of hushing up the affair to pursue its objective of a "security partnership" with China.
Members of the US Congress were swift to call for full information about the affair and tighter security at Los Alamos and other sensitive installations. Republicans said national security might have been subordinated to the interests of foreign trade.
The allegations coincide with a deterioration in Sino-American relations. These further details of the scandal may not be unwelcome to Washington, and may even have been conceived as a warning shot across Peking's bows.