Britain failed to prosecute a member of the intelligence services who passed secrets to Russia in World War Two out of fear of embarrassment, the BBC quoted files in the National Archives as saying on Friday.
MI5 also appeared to have failed to grasp the significance of former film critic Cedric Belfrage's activities.
The Briton worked for an arm of MI6 in New York after a career in Hollywood.
But his colleagues were unaware he had become increasingly left wing, probably after a trip to the Soviet Union.
Historians say his espionage could be ranked alongside that conducted by members of the Cambridge spy ring during the Cold War.
In November 1945, Elizabeth Bentley approached the FBI and said she had been part of a Soviet spy ring operating in the US.
When the FBI approached those alleged to be involved, the only person to initially offer a partial confession was Belfrage.
Born in London in 1904, he studied at Cambridge University, but left before taking his finals. He worked in Hollywood in the 1920s, then became the film and theatre critic for the Daily and Sunday Express, before moving back to the US in the 1930s.
By 1941 Belfrage was working for British Security Co-ordination (BSC) in New York, which co-operated with the FBI and where he had access to secret information.