Prime Minister Margaret Thatcher said Thursday that Maurice Oldfield, former head of Britain's MI6 intelligence service, had acknowledged having homosexual activities.
But Thatcher told Parliament that his conduct never resulted in a breach of security.
Her statement came four days after a British newspaper reported that Oldfield, who died of cancer at age 65 in 1981, had frequent relations with male prostitutes.
Oldfield, the head of MI6 from 1973 to 1978, was reputed to be the model for George Smiley, the spymaster in John le Carre's espionage thrillers. MI6, the British equivalent of the CIA, gathers intelligence abroad.
In a written statement to the House of Commons, Thatcher said Oldfield acknowledged his homosexual activities in a security review launched after he took over as head of security in Northern Ireland in 1979.
"In March, 1980, in the course of that review, he made an admission that he had, from time to time, engaged in homosexual activities," the statement said.
His admission was followed by a "lengthy and thorough investigation by the Security Service, which included many interviews with Sir Maurice Oldfield himself, to examine whether there was any reason to suppose he himself or the interests of the country might have been compromised."
"The conclusion was that, though his conduct had been a potential risk to security, there was no evidence or reason whatsoever to suggest that security had ever been compromised," Thatcher said.
"Indeed he had contributed notably to a number of security and intelligence successes which would not have been achieved had there been a breach of security."
The Mail on Sunday published an extract about Oldfield from journalist Chapman Pincher's forthcoming book, "Traitors: The Labyrinths of Treason."