A Canadian naval officer is facing accusations of selling top secret intelligence information from New Zealand and several other allied countries to Russia.
Jeffrey Paul Delisle, 41, is allegedly responsible for a "massive leak" of intelligence gathered by the US, Britain, Canada, New Zealand and Australia to Russian agents, Australian media report.
Prime Minister John Key's office has refused to comment on the alleged leak.
"We do not comment on security and intelligence matters," a spokesman said.
Several Russian diplomats were asked to leave Canada shortly after Delisle was arrested on January 14.
Australia's high commissioner to Canada, Louise Hand, discussed the case with Canadian Prime Minister Stephen Harper soon after the arrest, documents released to Fairfax Media under Australian freedom of information laws show.
Security sources told Fairfax the alleged spy's access was "apparently very wide" and that "Australian reporting was inevitably compromised", though it is not known what state secrets might have been revealed.
The Australian Security Intelligence Organisation was briefed through liaison with the Canadian Security Intelligence Service, the Fairfax report says.
Sub-Lieutenant Delisle's alleged actions were reportedly discussed at a secret international conference in New Zealand earlier this year.
In Canada, defence officials have confirmed to Canadian Press that Delisle had worked in the country's military nerve-centre at National Defence Headquarters and had spent his career working in military intelligence.
Up until 2010, he worked for both the Chief of Defence Intelligence and at the Strategic Joint Staff, which oversees virtually every major aspect of the Canadian military's domestic and international plans and operations.
The scale of the security breach is comparable to the massive leak of Government documents carried out by Wikileaks last year, reports say.
However, Sub-Lieutenant Delisle reportedly had higher security clearance than the alleged Wikileaks informant Private Bradley Manning.
The Wall Street Journal, which has broken some of the story, maintains American authorities took the breach far more seriously than Canadian officials have portrayed.
Quoting officials familiar with the situation, it said Washington had taken the alleged breach very significantly "despite Canadian insistence that allies haven't been overly concerned". It said the two allies have since patched up their differences over the issue.
The Wall Street Journal said while no-one had detailed the breach, it understood "it was military signals information, or electronic communications coming from allied and other state militaries, and it was leaked to the Russians".
The Globe and Mail, Canada's leading newspaper, also revealed that Delisle is an avid Internet gamer under the nom de plume Baron Mordegan and a collector of medieval fantasy gear.
His ex-wife Jennifer Delisle told the newspaper that her former husband admitted "he had a computer addiction problem".
The National Post has reported that he allegedly began to hand over secret intelligence around the time his marriage began to fall apart near the end of 2007.
Delisle is due to appear before the Nova Scotia supreme court for a preliminary hearing in October.
- AAP, Herald Online staff