Data minister Ian Murray told parliament that the breach involved the information of all 500,000 Biobank members.
"This has been an unacceptable abuse of the UK Biobank charity's data," he said, adding that the data was downloaded legitimately by three research institutions in China.
Biobank uses medical data from volunteers to help researchers make scientific discoveries, such as improving the detection and treatment of dementia and cancers.
The organisation said in a statement that "de-identified participant data made available to researchers at three academic institutions were listed for sale on a consumer website in China, owned by Alibaba."
"Alibaba swiftly removed those listings before any sales were made," Biobank chief executive Rory Collins added, confirming that the data did not include personally identifying information.
The three Chinese research institutions identified have had their access suspended.
"We are still working with Biobank to ascertain from them the specific detail of what has happened," Murray said.
"We have asked them to investigate how this data ended up for sale online as a priority," he added.