The UK was too embarrassed to prosecute its former intelligence officer Cedric Belfrage for passing secrets to Russia during the second World War, files released by the National Archives show.
The BBC said that the documents also showed that the MI5 "appeared to have failed to grasp the significance" of the former film critic's activities.
The National Archives published the latest files released by MI5 which spanned from before World War II to the mid 1960s. Personal files now available include those of individuals classed as Soviet Intelligence officers, agents and suspected agents; right-wing extremists; communists, suspected communists and communist sympathisers.
Belfrage, who was codenamed Benjamin by the Russians, worked as a theatre critic for the Daily and Sunday Express before moving to the US where he worked for the British Security Co-ordination in New York which co-operated with the Federal Bureau of Investigation (FBI) and where he had access to secret information.
Between 1941 and 1943 he passed secret documents to Russia on subjects ranging from British policy on Russia, the Middle East and reports on France and from the British police.
In November 1945, Elizabeth Bentley approached the FBI and confessed that she had been part of a Soviet spy ring operating in the US. Belfrage was the only one of those alleged to be involved in the spy ring, who made a partial confession to the FBI, the BBC said.
He was however not prosecuted in the US because he had not broken any law in the US as he had passed British and not American secrets.
He was however detained in 1955 and deported back to Britain after he refused to answer any questions before the House on Un-American Activities Committee which was part of the McCarthy hearings into communism in the US.
He was deported for being a member of the American Communist Party in the 1930s under a false name. His return to Britain attracted wide media coverage, where BBC said, he was lauded by some as a hero for standing up to the anti-communist fervour in the US.
To prosecute or not?
The MI5 however faced a problem. Although they knew the documents Belfrage had handed to the Russians were valuable, it realised that it would need more evidence for the prosecution to stand up in court.
Belfrage had told the FBI that he had passed files to Russia during the war on the orders of his superiors to get material back in return and that the information given were "a really trifling nature" from the point of view of British and American interest.
Despite seeking MI6 help, MI5 was unable to find any files or people to support a case against Belfrage. The BBC said the files released show the M15 also made reference to the "potential embarrassment of a prosecution" in while Belfrage's role in the UK's intelligence would come out in court.
There was also concern over public opinion that some quarters supported him. The BBC noted that although Belfrage never faced prosecution, he was placed under extensive surveillance when he returned to the UK. He later moved to Latin American where he died in 1990.
Surprisingly, the declassified National Archives files show that MI5 failed to establish much about his activities nor did they ever question him.
Svetlana Lokhova, an expert on Russian intelligence said: "I think he was one of the most important spies the Soviet Union ever had." She said decrypted Soviet communications mention Belfrage and that the Russians made repeated attempts to reconnect with him after his handler, Russian spy Jacob Golos died.
Both Lokhova and MI5 official historian Prof Christopher Andrew said that the fact that Russian intelligence, the KGB never revealed anything about Belfrage suggests his importance.
The archives also show that Nobel prize winning author Doris Lessing was kept under surveillance by the MI5 for 20 years.