Labour has undermined an investigation into a Chinese spy probe against politicians to protect the UK’s relationship with Beijing.

According to senior UK officials, Sir Keir Starmer’s international security advisers and the Foreign Office had a significant dispute with the Home Office over the so-called China spying case.

It is understood that the Home Office wanted to press ahead with the case but Sir Keir’s Government intervened leading to prosecutors dropping the case last month, senior officials told the Financial Times.

Senior Government figures believe the dispute unfolded due to security advisers and the Foreign Office not wanting to upset China, with the UK trying to improve relations.

The prosecution fell apart after security officials said they would not provide testimony against Beijing if it could be defined as an “enemy”.

The term is a key element for a prosecution under the Official Secrets Act, which alleged spies had been charged with breaching.

Despite UK prosecutors, backed by testimony from one of the same British security officials, arguing earlier this year in a hostile state spying case that an enemy included “any country which presents a threat to our national security”, the case was dropped.

The National Security Strategy, published in June, warned that China had increased “espionage” and “interference in our democracy and the undermining of our economic security” in recent years.

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However, it also stated that the UK wanted to increase trade with Beijing.

National security adviser Jonathan Powell oversaw the document and warned that the UK needed to “reduce the risks of misunderstanding and poor communication” with China.

The latest revelations come as Labour secretly blocked the prosecution of two men accused of espionage for China by withdrawing a crucial Government witness, according to revelations that have emerged.

The witness, a senior civil servant, had been prepared to provide testimony establishing that China constituted an “enemy” of Britain.

The decision led to prosecutors abandoning charges against Christopher Cash, 30, and Christopher Berry, 33.

Both men had faced accusations of gathering and transmitting information to a high-ranking Chinese Communist Party official that could benefit a hostile state.

The prosecution had received assurances from the previous Tory administration that officials would provide evidence in court about China’s status as a hostile nation.

Intelligence personnel were also scheduled to provide testimony in closed sessions to maintain their anonymity.

However, when Labour took office, ministers informed prosecutors they would not permit China to be characterised as an enemy during legal proceedings.

This withdrawal of support occurred in early September, making it impossible for the Crown Prosecution Service to meet the statutory requirements for conviction.

Alicia Kearns, the Conservative MP who previously employed Mr Cash, stated that withdrawing a witness prompted “serious questions about constitutional impropriety”.

She demanded transparency, saying: “In the public interest, the Government must disclose ministerial involvement, and come clean on whether any Government witnesses were withdrawn.

“Mr Starmer must answer: was it no longer in the public’s interest to prosecute, or more likely he and his Labour Government don’t have the mettle to defend the British people and our great democracy?”