The government suspects China was behind the hack of an armed forces payroll system, the BBC understands.

Defence Secretary Grant Shapps will not identify a specific culprit when he addresses MPs today, but is expected to warn of the dangers posed by cyber espionage from hostile states.

The system used by the Ministry of Defence (MoD) includes names and bank details of armed forces personnel.

China described the suggestion as a “fabricated and malicious slander”.

Prime Minister Rishi Sunak, while stopping short on naming the country responsible, said “a malign actor has compromised” the payroll system. In a very small number of cases, the data may include personal addresses.

The system, holding “personal HMRC-style information” for current regular, reservist and former members of the Royal Navy, Army and Royal Air Force over a period of several years, was managed by an external contractor.

Downing Street said it was reviewing the security of the unnamed contractor’s operations.

The government became aware of the data breach in recent days, and has not found evidence hackers removed data but is continuing to investigate.

Sources have told BBC News the investigation into who was behind the breach, which will be seen as embarrassing for the MoD, is at an early stage.

It can take months, sometimes years, to gather enough evidence to publicly accuse so China is unlikely to be officially named yesterday.