David Shayler: believed to be somewhere in Europe

BBC Newsnight interview: "Operatives grappling with bureaucracy are not catching terrorists" Dur: 6'39"

Police Probe MI5 Man's Interviews

The head of MI5, Stephen Lander, spent more than an hour with the Home Secretary, Jack Straw, on Wednesday morning.

Mr Lander briefed Mr Straw on developments and it is understood that the two men discussed the current arrangements for Parliamentary oversight of the security service.

Mr Shayler had told the BBC that, because of bureaucracy and inefficiency, MI5 had wasted a real chance to "finish off" the IRA when it was mounting a bombing campaign in England in 1993.

He said he'd been told that a file was kept on the former prime minister, Sir Edward Heath, because he was keen on rapprochement with the Eastern bloc.

Stephen Lander: "amicable, free and frank" talk with the Home Secretary

He had also told a Sunday newspaper that the organisation had bugged young politicians - including Mr Straw himself and two others who are also now senior members of the Government: Peter Mandelson, the Minister without Portfolio, and Harriet Harman, the Social Security Secretary.

Under the 1989 Official Secrets Act it is an offence for anyone who has been a member of the Security Service to disclose sensitive information gleaned through their job without lawful authority.

Ultimately it would be for the Attorney General, John Morris, to sanction any prosecution under the Act, should the police investigation produce compelling evidence of a breach.

If convicted of an unauthorised disclosure, Mr Shayler could face up to two years' imprisonment, an unlimited fine or both.

The civil rights group, Liberty, said Mr Shayler's continuing revelations called into question the whole existence of the Security Service.

John Wadham: has contacted Mr Shayler offering to help fight any prosecution

Liberty's Director, John Wadham, said: "We need some of their resources, we need sometimes bugging, sometimes we need tapping, sometimes we need police officers to go under cover. But I don't think in a democratic society particularly at this time after the end of the Cold War, we really need a secret police force itself.

"These examples demonstrate that MI5 hasn't been under control, under any democratic or legal controls. We have to raise questions about their existence."

The Liberal Democrat MP, Alan Beith, a member of the Commons Select Committee on Intelligence and Security, said MI5 appeared to have gathered intelligence too widely, and on individuals who were not appropriate surveillance targets. But things had changed, and police forces appreciated the service's assistance.

"The priorities are now quite different - fighting terrorism, drugs trafficking, counter-intelligence," he said.

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