The British national, whose death in 2011 caused the downfall of popular Chinese politician Bo Xilai, was tagged as a willing informant of the UK government and appeared to have played the role two years before his demise, reports said.
Citing anonymous sources that include past and present British officials, The Wall Street Journal reported on Tuesday that Neil Heywood came in contact with a personality connected with M16, which is the intelligence arm of the British government, and kept in touch for a year or more.
Mr Heywood was said to have volunteered information to the alleged M16 officer and most of the transmission pertained to the family of Mr Bo, whose wife, Gu Kailai, was the Briton's close friend and business partner.
In China, The Journal said, information regarding Chinese officials and their family members were treated as state secrets, and according to the U.S. publication, Mr Heywood freely provided snapshots of what he gathered about the Bo family.
The British was widely known to have enjoyed unusual access to the Bos, owing to his personal friendship with Ms Gu. But the relationship apparently soured, leading to the death of Mr Heywood in November last year.
In March 2012, the Chinese government announced the dismissal of Mr Bo as Chongqing party chief and the arrest of his wife and a close associate. August this year, Ms Gu was given a suspended death sentence as a Chinese found her guilty of poisoning Mr Heywood.
Mr Bo's former police chief was also sent to jail and he was recently expelled from the Chinese congress, leading China watchers to speculate that Mr Bo is next line for legal prosecution.
The report of Mr Heywood being a British informant has been swirling for some time, The Journal said, forcing British Foreign Minister William Hague to publicly dismiss the speculations.
"Mr Heywood was not an employee of the British government in any capacity," The Journal reported Mr Hague's statement on the matter, which was issued April 2012.
Sought for comments on the matter, the British embassy in the United States simply declared: "We don't comment on intelligence matters," Reuters reported on Wednesday.
However, Mr Heywood's alleged intelligence works, according to news report, could likely be established via his connection with the intelligence consultancy firm operating in Beijing and was reported to have been set up by a former M16 official.
The Times identified the outfit as Hakluyt, which reportedly had contracted Mr Heywood with a number of projects.
The Briton, The Journal said, had deliberately cultivated a spy image and drove around in Beijing with a flashy Jaguar sports car. Mr Heywood used car plates bearing the '007' numbers, which are automatically identified with fictional British spy icon James Bond, the paper added.