A spying operation that infiltrated computers - many of them belonging to governments - in 103 countries has been uncovered by a group of Canadian researchers, the New York Times reported Sunday.

Victims of the malicious software, or malware, include computers in the offices of the Dalai Lama, Tibetan exile centres around the world, NATO headquarters in Brussels, and the Indian embassy to the United States.

In all, 1,295 computers might have been accessed and had documents copied by the system, which the researchers dubbed GhostNet.

In addition, the malware could also be used to turn the computers' own camera and audio systems into observation devices for the malware's operators. The researchers however could not confirm if this application was put into practice.

The report, to be released this week by the Munk Center for International Studies at the University of Toronto, says that the spying system was controlled by computers based almost entirely in China.

The researchers were careful not to accuse the Chinese government of being behind the security breach.

"We're a bit more careful about it, knowing the nuance of what happens in the subterranean realms," researcher Ronald J Deibert was quoted as saying. "This could well be the CIA or the Russians. Its a murky realm that were lifting the lid on."

Gao Wenqi, spokesman for the Chinese Consulate in New York, gave an unequivocal denial of Chinese government involvement, saying: "These are old stories and they are nonsense. The Chinese government is opposed to and strictly forbids any cybercrime."

However, the Times reported several instances where Chinese officials reacted to data that was picked up by GhostNet. In one case, a foreign diplomat was advised by the Chinese government not to meet with the Dalai Lama after the Tibetan leader's office emailed him an invitation.

The centre began its investigation after a request from the Dalai Lama's office to check its computers for potentially damaging software.