The Foreign Office dismissed claims that it knew about the Hamas assassination plot in advance as "completely untrue" today.
A spokeswoman insisted the department had "no prior knowledge" of the operation or the involvement of cloned British passports.
An article in today's Daily Mail featured allegations from a British security source that the Foreign Office had been told Israeli agents were going to carry out "an operation" abroad and would be travelling on British passports.
The source told the newspaper he had spoken with an agent from Israeli secret service Mossad - which is suspected of being behind the hit.
"He says the British Government was told very, very briefly before the operation what was going to happen," the source reportedly said.
"There was no British involvement and they didn't know the name of the target. But they were told these people were travelling on UK passports."
The Foreign Office said it only found out about the murder of Mahmoud al-Mabhouh in Dubai last month when details appeared in media reports.
And the department insisted it was only told that cloned British passports were involved shortly before authorities in the Gulf state went public with the information.
"Any suggestion that we knew anything about the murder in Dubai before it happened, including about the misuse of British passports, is completely untrue," the spokeswoman said.
"As we have said already, the Dubai authorities told us about the role of British passports on February 15, several hours before their press conference. We told them the following day that the passports used were fraudulent.
"The head of the Dubai police has also made clear that embassies were not contacted until shortly before the identity of the suspects was revealed."
Dubai police have said that cloned passports belonging to six British Israelis and five Irish citizens were used by a hit squad who allegedly killed the Hamas commander.
Shadow foreign secretary William Hague yesterday called for "fuller" answers about when the Foreign Office was aware fake British passports had been used, saying reports in the Gulf suggested British ministers may have been alerted by Dubai authorities last month.
"We have had 13 years of the current Government and believing at face value immediately everything they say has not been borne out by experience," he said.
He added: "I'm not suggesting complicity with Israel, I simply say there are news reports in the Gulf that this may have been known about by the British Government or other governments at an earlier stage."
Foreign Secretary David Miliband branded the abuse of ID documents "outrageous" and demanded that Tel Aviv co-operate fully with the UK's investigation.
But after being called in to discuss the situation with officials in London yesterday, Israel's ambassador Ron Prosor flatly denied there was any "additional information" to give.
Tel Aviv's ambassador to Ireland, Zion Evrony, delivered a similarly blank message after an hour of discussions with diplomat David Cooney in Dublin.
Red notices have been issued via Interpol in the hunt for 11 people allegedly involved in the hit, and the UK's Serious Organised Crime Agency (Soca) is also investigating.
Senior officers in Dubai say they are "99% certain" that Mossad was behind the murder. Tel Aviv has refused to confirm or deny the link.Reuse content