Third-party payroll system with names and bank details of armed forces staff hacked, reports say.

On Tuesday, Work and Pensions Secretary Mel Stride told Sky News, which first reported the hack, that the attack was on a system run by an outside firm but was still a “very significant matter”.

It targeted a third-party payroll system used by the Defence Ministry and included the names and bank details of current and former service personnel of the armed forces, Sky News and the BBC reported.

Defence Secretary Grant Shapps is expected to give further details to parliament later in the day.

“The MoD [Ministry of Defence] has acted very swiftly to take this database offline. It’s a third-party database and certainly not one run directly by the MoD,” Stride told Sky. The ministry first discovered the cyberattack several days back.

Tobias Ellwood, a former minister in the Conservative government, said the incident has the hallmarks of a Chinese cyberattack.

“Targeting the names of the payroll system and service personnel’s bank details, this does point to China because it can be as part of a plan, a strategy to see who might be coerced,” the former soldier and ex-chairman of a parliamentary defence committee told BBC Radio.

Meanwhile, Stride said the government was not currently pointing the finger at Beijing.

“That is an assumption … we are not saying that at this precise moment,” he added.

Shapps is to confirm that a hostile state was the culprit, according to British media reports, but the government is not expected to publicly name China.

China refutes claims as ‘utter nonsense’

China’s Ministry of Foreign Affairs spokesperson Lin Jian said Beijing opposed all forms of cyberattacks and rejected any attempt to use the issue of hacking for political ends to smear other countries.

“The remarks by relevant British politicians are utter nonsense,” Lin said on Tuesday. “China has always firmly opposed and cracked down on all types of cyberattacks.

The two countries have increasingly sparred over the issue of hacking, with Britain saying in March that Chinese hackers and a Chinese entity were behind two high-profile attacks in recent years – the targeting of parliamentarians critical of China, and an assault on the country’s electoral watchdog.

It has strained ties as Britain sought to strike a delicate balance between trying to neutralise security threats posed by China while maintaining or even enhancing engagement in some areas such as trade, investment and climate change.

But there has been growing anxiety about its alleged espionage activity in Britain, particularly before general elections expected later this year, and some British politicians have become increasingly vocal over the threat that they say China poses.