Fritz-Harald Wenig, one of the European Union's most senior trade officials, is said to have passed confidential information on import levies and market access to Sunday Times journalists posing as lobbyist middle-men for Chinese companies.

The investigation into one of Mr Mandelson's closest aides, a department director in the top level of the Trade Commissioner's team, has raised fears that Chinese business espionage has penetrated the highest ranks of Brussels officialdom.

While no payments were made to Mr Wenig, he is accused of leaking the names of two Chinese companies likely to get special status if the EU imposes a protective import tariff barrier against candles made in China.

He is also alleged to have handed over information detailing new EU levies on cheap Chinese shoes, measures that have not yet been agreed by the Commission. "The information is potentially worth millions," the Sunday Times claimed.

The allegations raise questions about the security and probity of Commission decisions which are directly responsible for the EU's trade policy in global markets worth billions.

Mr Wenig has denied giving away commercially sensitive secrets and described the leaked information as "semi public".

The Commission has opened an investigation to "establish the facts and the appropriate consequences" behind the allegations.

"The Commission follows a policy of zero tolerance vis-a-vis unethical and illegal behaviour," said a statement.

Syed Kamall, a Conservative MEP on the European Parliament's trade committee, said the case showed the need for greater openness "in EU decision-making which affects the livelihoods of retailers, their employees and millions of consumers".

"We've all known that the EU's trade policy lacks transparency, but allegations of industrial espionage take it to a whole new level and must be investigated," he said.