NATO diplomatic sources have told The Times that the Chinese have become very active with cyber-attacks.
'We are now getting regular warnings from the office for internal security,' they said, adding that the number of attacks had increased significantly over the past 12 months.
China, they said, is among the most active players.
In United States, an official report released on Friday said the number of attacks on Congress and other government agencies had risen exponentially in the past year to an estimated 1.6 billion every month.
The Chinese cyber-penetration of key offices in both NATO and the EU has led to restrictions in the normal flow of intelligence because there are concerns that secret intelligence reports might be vulnerable.
Sources at the Office for Cyber Security at the Cabinet Office in London, set up last year, said there were two forms of attack -- those focusing on disrupting computer systems and others involving 'fishing trips' for sensitive information.
A special team has been set up at GCHQ, the government communications headquarters in Gloucestershire, to counter the growing cyber threat affecting intelligence material. The team becomes operational this month.
British and American cyber defences are among the most sophisticated in the world, but "the EU is less competent", James Lewis, of the Centre for Strategic and International Studies, said.
The lack of routine intelligence sharing between the US and the EU also contributes to the vulnerability of European systems, another analyst said.
Jonathan Evans, Director-General of MI5, had warned in 2007 that several States were actively involved in large-scale cyber-attacks. Although he did not specify which States were involved, security officials have indicated that China now poses the gravest threat. Beijing has denied making such attacks.
Robert Mueller, FBI Director, has warned that, in addition to the danger of foreign states making cyber attacks, Al-Qaeda could in the future pose a similar threat. In a speech to a security conference last week, Mueller said terrorist groups were using the Internet to recruit members and plan attacks.
