China has reportedly stolen the names and bank details of the entire British armed forces, the government fears.

The Ministry of Defence has launched a crisis response after discovering some 270,000 people’s details were compromised in the suspected state-sponsored hack.

Despite no official confirmation, China has been named as the culprit by insiders, targeting both active and veteran service personnel via MoD’s payroll system.

China’s foreign ministry said it “firmly opposes and fights all forms of cyber attacks” and “rejects the use of this issue politically to smear other countries”.

Defence Secretary Grant Shapps is set to address the House of Commons today, while Conservative MP and former soldier, Tobias Ellwood gave some insight into what the Chinese might use the data for.

Speaking to Sky News, Ellwood suggested that the Chinese were “probably looking at the financially vulnerable with a view that they may be coerced in exchange for cash”.

Downing Street said it was reviewing the security of the unnamed external contractor who managed the data’s operations.

Despite the attack all salaries will be paid this month to military personal.