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Dozens of prisoners in British jails are routinely under covert electronic surveillance, security sources told The Times last night.

The controversy over the bugging of conversations between Sadiq Khan, the Labour MP for Tooting, and his friend and constituent, Babar Ahmad, at Woodhill prison, Buckinghamshire, highlighted the shadowy area of covert intelligence gathering in jails.

The operation to monitor Mr Ahmad, who is fighting extradition to the United States, where he is wanted on terrorism charges, was authorised without the knowledge of ministers.

It was authorised by senior police officers. Scotland Yard, which takes the lead on counter-terrorist operations, and Thames Valley Police, in whose force area Woodhill lies, were aware of it. Neither is prepared to comment.

It was reported last night that the bugging was carried out by Mark Kearney, 49, a former sergeant with Thames Valley Police who is currently facing prosecution for allegations of wilful misconduct in a public office. He was a police intelligence officer inside Woodhill prison and has said in court documents that he was under pressure from the Metropolitan Police to carry out surveillance on the meeting between the MP and his constituent.

Authority for the surveillance was renewed every 28 days, ran continuously for a long period and might still be continuing. Mr Ahmad is now held in Long Lartin prison, Worcestershire.

According to reports last night, the bugging of Mr Khan and Mr Ahmad may have begun as long ago as 2004 – before Mr Khan became an MP.

Eavesdropping operations are conducted on a significant number of terrorist inmates and on a large number of prisoners linked to organised crime networks. They are used to monitor communication with people outside the jail and can yield vital intelligence about terrorist plots, drug shipments and other criminal activity.

A security source said it was often not possible to switch the surveillance on and off and “collateral damage” could occur when exchanges between prisoners and their lawyers or MPs might be recorded. Such material was discarded, the source insisted.

The Times was told last night that the Ministry of Justice and the Home Office were told at official level that the bugging of conversations at Woodhill had taken place, but that it was not necessarily clear that the police knew that an MP had been involved in the conversations. It was also said that ministers had not been told of the tapping and that the first Mr Straw knew about it was this weekend when he was informed of the report inThe Sunday Times. “Ministry of Justice officials became aware in December of issues concerning visits to Woodhill prison by Sadiq Khan,” the ministry said.

David Davis, the Shadow Home Secretary, described as “extraordinary” the allegation that Mark Kearney had been pressurised into the bugging.

Downing Street had previously said that it never received a letter about the issue from Mr Davis. Last night the Shadow Home Secretary said: “After the lame excuse from No 10, it is becoming apparent that the Government did know about this very serious issue - at the time I wrote my letter.

“It is beyond belief that the department would not flag up to a minister that the Wilson Doctrine had been broken within the department.”

There are currently 130 Category A terrorist prisoners in British jails, and the potential for Islamists to radicalise other Muslim prisoners and convert impressionable inmates is seen by counter-terrorism police officers as a serious threat. Belmarsh jail holds the largest concentration. There have been discussions about dispersing the inmates but that would risk widening the circle of inmates they could influence.

Last year Phil Wheatley, the Direc-tor-General of the Prison Service, told the Home Affairs Select Committee he believed that holding all terrorists in one jail was dangerous. “They can form a very tight cell structure and be much more dangerous with what they can do in prison and sometimes what they plan to do outside,” he said.

All Category A prisoners are subjected to mandatory monitoring of their telephone calls and mail. In some cases, evidence of monitored calls can be admitted as evidence in trials.

If the inquiry set up by Mr Straw concludes that the bugging of Mr Ahmad was illegal, it could lead to the prisoner taking action in the courts. His lawyers are examining whether taping his discussion with his MP breaches his right to privacy under the European Convention on Human Rights.

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