The UK may reverse its decision to approve the Chinese firm as a supplier for its supplier for its 5G network technology in light of US sanctions, according to a report by GCHQ's National Cyber Security Centre.
The study, which has been leaked by the Daily Telegraph newspaper, explains that Huawei's operations "will force the company to use untrusted technology that could increase the risk to the UK".
A source has also told Bloomberg that Britain is now preparing to phase out the Chinese tech firm.
But the UK government said in a statement: "We are considering the impact the US' additional sanctions against Huawei could have on UK networks.
"This is an ongoing process and we will update further in due course."
Meanwhile, Victor Zhang, the Huawei vice-president, has revealed the company is working on a way to deal with the US sanctions.
He said: "We are working closely with our customers to find ways of managing the proposed US restrictions so the UK can maintain its current lead in 5G.
"We believe it is too early to determine the impact of the proposed restrictions, which are not about security, but about market position."