The man, Dr Robin Pearson, an economics expert at Hull University, is said to have conducted numerous spying trips for the Communist regime and his role only ended with the fall of the Berlin Wall.
MI5 questioned Dr Pearson, who was codenamed Armin, in 1994, but he was not charged with any offence because "there was no usable evidence against him", said one Home Office source.
Jack Straw, the Home Secretary, was informed about the allegations against Dr Pearson by the head of MI5 last week at a briefing following disclosures about the Mitrokhin archive, the KGB records obtained by the security services in the early 1990s but not made known to ministers until recently.
The decision not to prosecute Dr Pearson follows a similar one in the case of Melita Norwood, 87, named in the Mitrokhin files as having spied for Russia for decades. Both cases raise questions about the information passed to ministers by the security services.
Dr Pearson's name is said to be among those of a number of alleged British agents contained in East German secret files obtained by the CIA after the fall of the Berlin Wall. He is alleged to have been recruited by the Stasi's foreign intelligence arm, the HVA, while studying at Leipzig University in 1977.
Dr Pearson later began spying on fellow students at Edinburgh University, passing on information about former students and colleagues in sensitive posts.
In the early Eighties, Dr Pearson was engaged to spy on two Polish exiles. The files said: "Information that Armin sent us points to Professor Zygmunt Baumann from Leeds University as being someone who has been working for the counter-revolution in Poland."
He was also tasked with befriending women who worked for the Ministry of Defence and acting as a "spotter" to recruit future agents.
The role of the Stasi in Britain and Dr Pearson's role features tomorrow in The Spying Game on BBC 2, details of which were disclosed on the BBC news last night.
Confronted by the BBC, Dr Pearson admitted that his codename was Armin, and when shown a document proving that he once held an East German passport in a false name, he said: "Well, as I say, there is a story, sure, but I don't particularly want to tell you it," the BBC said.
Leading article, Review, page 3