Russia has accused a British diplomat based in Moscow of spying.
He was named in media reports as Chris Bowers.
A Foreign Office spokeswoman said: "I can confirm that a member of the British staff is suspected of spying by the Russians. He is the acting director of UK Trade and Industry. However we do not comment on intelligence matters."
The allegation follows weeks of antagonism and growing tension between London and Moscow.
An unnamed source within Russia's intelligence services is said to have accused Mr Bowers of being a high-ranking secret service officer and to have claimed he worked undercover in the 1990s as a BBC reporter in Uzbekistan.
Russia news agency Interfax reported the source as saying: "The activities of Christopher Bowers, a counsellor at the British Embassy in Russia, and probably, simultaneously a senior officer with British Intelligence, are giving rise to questions among Russian intelligence services."
It was claimed Mr Bowers had been engaged in "suspicious" meetings with activists from the North Caucasus, including Chechnya.
The Times reports the decision to single out Mr Bowers may be linked to the struggle for the Anglo-Russian oil giant TNK-BP.
The newspaper claims British security officials have voiced fears that Russia's intelligence services may have flooded London with agents.
Relations between Britain and Russia have been frosty since the killing of ex-KGB agent Alexander Litvinenko, who died in a London hospital on November 23, 2006 from radiation poisoning.
Andrei Lugovoy, a former associate of Mr Litvinenko, is believed to be a main suspect in his murder.
The British government has repeatedly demanded that the Russian authorities hand over Mr Lugovoy, without success.
On Monday, Gordon Brown held a testy meeting with Russian president Dmitry Medvedev in which they failed to make progress across a range of issues which have blighted Anglo-Russian relations, including the killing of Mr Litvinenko.