The government has given its strongest hint yet that Chinese tech giant Huawei will be given a limited role in the development of the UK's 5G network, despite fierce resistance from Donald Trump's US administration.
Downing Street today insisted that no final decision has yet been made, amid reports that officials have formally recommended giving the green light to Huawei's involvement in "non-core" elements of the high-speed telecoms network.
But one government source suggested it would not be viable to exclude the company in the absence of alternative products of similar quality and price from US or European sources.
"There's been a market failure here which clearly needs rectifying as we go forward," said the source. "We've asked the US what's the alternative to provide a solution and the answer has been a shake of the head."
Mr Johnson himself last week issued a plea to the US to explain what other options it proposed, telling a TV interview: "The British people deserve to have access to the best possible technology. If people oppose one brand or another, they have to tell us what's the alternative."
Security agencies have previously stated publicly that any risks from the use of Huawei equipment in the hi-tech telecoms network can be managed.
But the final decision - expected at a meeting of the National Security Council next week - is highly political, with Boris Johnson risking a furious row with Donald Trump, who regards the Chinese company as a security threat and has banned US companies from using its networking kit.
A clash with Washington over Huawei would make an inauspicious start to Mr Johnson’s efforts to strike a trans-Atlantic trade deal in the months after Brexit on 31 January.
However, ruling the company out of involvement in UK networks would impose billions in extra costs and long delays in the rollout of 5G, hitting the prime minister’s chances of delivering on his promises of superfast digital communications.
Mr Johnson’s official spokesman did not deny a report by news agency Reuters that officials from security agencies and government departments had recommended allowing Huawei a role in non-core elements of the network at a high-level meeting on Wednesday.
But he said that the ongoing assessment of the potential risk of its inclusion has not yet concluded.
“The work on the issue of high-risk vendors on the 5G network remains ongoing and when it is completed it will be announced to parliament,” said the spokesman.
The decision on Huawei has been repeatedly delayed since a leak from the NSC last year revealed that then prime minister Theresa May had agreed in principle that it could supply non-core parts of the network, such as antennae.
UK ministers have come under intense pressure from Washington to exclude Huawei, with a senior US delegation to London last warning that allowing the Chinese firm access would be “nothing short of madness”.
Speaking at the Nato summit in London last month, Mr Johnson acknowledged concerns over possible "prejudice" to intelligence co-operation with Britain’s ‘Five Eyes’ security partners - the US, Canada, Australia and New Zealand.
But MI5 head Andrew Parker said that he had “no reason” to think that the longstanding intelligence partnership would be jeopardised if the UK opted for Huawei technology.
The decision is particularly awkward for the UK because, unlike the US, it has used Huawei equipment over more than a decade in its 4G and fixed broadband networks, raising potential compatibility problems if forced to switch to another supplier.
Telecoms companies complain that there are no alternatives of the same quality or price available from US or European firms.