The Government faces renewed pressure to designate China a threat to national security after the naming of an alleged Chinese spy with close links to the Duke of York.

Yang Tengbo, who denies wrongdoing, is the latest person to be named as an alleged Chinese agent following claims in recent years about Beijing’s infiltration of Westminster.

The revelations have prompted parliamentarians to urge the Government to implement the foreign influence registration scheme (Firs) proposed by its predecessor, and place China in the “enhanced” tier that would bring greater scrutiny.

Sir Iain Duncan Smith, the former Conservative leader and one of Parliament’s most vocal China hawks, told MPs on Monday that Mr Yang was “not a lone wolf”.

Pointing to a report by Parliament’s Intelligence and Security Committee, he said there were 40,000 members of China’s United Front Work Department who had “penetrated every sector of the UK economy”.

Security minister Dan Jarvis insisted the Government would use “every tool at our disposal” to protect the UK, but said Firs had not been ready to be implemented when Labour came to power, despite claims to the contrary from the opposition.

He told MPs: “Since coming into office, we have ensured that there are now more people than ever working on Firs implementation.”

But he was unable to say whether China would be placed in the “enhanced” tier when Firs was introduced in the summer of 2025.

Such a move could pose problems for the Government, as it could lead to a retaliation by Beijing.

However, Foreign Secretary David Lammy did acknowledge on Monday that China was one of a number of states that “pose a threat to us”, saying Mr Yang’s case “does not exist, sadly, in a vacuum”.

The row over alleged spying by Mr Yang comes after a period of improving relations between London and Beijing since Labour came to power in July.

Sir Keir Starmer became the first prime minister to meet Chinese president Xi Jinping when the two spoke at the G20 summit in Brazil last month, while Mr Lammy made a two-day visit to China in October.

But the Prime Minister admitted he was “concerned about the challenge that China poses” during a press conference on Monday.

He said: “Our approach is one of engagement, of co-operating where we need to co-operate, particularly on issues like climate change, to challenge where we must and where we should, particularly on issues like human rights and to compete when it comes to trade.

“That’s the strategic approach that we have set out as a UK Government.”