Charges against Christopher Cash, 30, and Christopher Berry, 33, were dropped last month, two years after they were arrested on allegations of collecting information which could be "useful to an enemy".

Prime Minister Keir Starmer's government covets Chinese investment to spur a struggling economy and is pondering a request from Beijing to build a controversial new embassy building in London.

The Sunday Times newspaper reported this weekend that national security adviser Jonathan Powell had pushed for the spying case to be withdrawn over fears it could prompt China to pull investment.

Starmer's spokesman told reporters on Monday the claim was "entirely false".

"There was no role for any member of this government, no minister, or special adviser, to take any decision in relation to this case. That is entirely for the CPS," he said, referring to the Crown Prosecution Service, which operates independently of the government and police.

CPS chief Stephen Parkinson said last week the case had been dropped because the government failed to provide evidence Beijing was a security threat.

Parkinson, whose job Starmer once occupied, said prosecutors had tried "over many months" to get the evidence needed to proceed with the trial, but it had not been forthcoming from the government.

To prove the case under the UK's Official Secrets Act, prosecutors needed to show that the defendants were acting for an "enemy" -- a country that threatened national security at the time of the offence.

The alleged offences took place between December 2021 and February 2023, when the opposition Conservatives were in power.

- 'Unanswered' questions -

Starmer has blamed the case's collapse on the previous government for not formally designating China a threat.

Ties between Beijing and the Conservative government hit rock bottom before the party was voted out of office last year.

Starmer has set about trying to reset relations with China, becoming the first British prime minister in six years to meet President Xi Jinping last year.

Several senior ministers have made trips to China, with Starmer rumoured to be planning a trip.

His government has also resisted calls from the Conservatives to put China on the enhanced tier of the so-called Foreign Influence Registration Scheme alongside Iran and Russia.

The scheme requires anyone carrying out "political influence activities" on behalf of a foreign power to register with the government or face prosecution.

Security minister Dan Jarvis said Monday: "This government is unequivocal, the first duty of the government is to keep people safe."

"We fully recognise that China poses a series of threats to UK national security," he told MPs during a parliamentary debate.

"Yet we must also be alive to the fact that China does present us with opportunities. It is the world's second largest economy".

The arrests of Cash and Berry sparked concerns of a major security breach as Cash was revealed to be a parliamentary researcher reportedly sharing close ties with senior Conservative lawmakers.

House of Commons Speaker Lindsay Hoyle said he was "very angry and disappointed" about the collapsed case and was considering bringing a private prosecution against the two men.

"It is of the utmost importance to me that all those who work in this parliament are able to undertake their activities securely," he said, adding "it is this parliament that has been spied on. It is MPs' offices that have been infiltrated".

"My job is to protect parliament. I feel we aren't getting that protection."

Jarvis said Britain's domestic MI5 spy service was issuing lawmakers and parliamentary staff with new guidance to protect them from possible foreign interference.

The guidelines urged those at risk to regularly review privacy settings of online profiles and to "keep track of odd social interactions" such as approaches that involve "overt flattery".

The government is expected to announce soon whether it will allow China to build a sprawling new embassy near the Tower of London, which is has triggered concern among residents and human rights advocates.