The UK government has confirmed it is to review Huawei's involvement in a cybersecurity centre.
The news follows a report by Parliament's intelligence committee which raised concerns that staff working at the base in Oxfordshire were employed by the Chinese telecoms firm.
Part of their job is to test Huawei's own equipment for vulnerabilities.
US politicians have claimed that the company posed a threat because of links to China's government and military.
The allegations are based, in part, on the fact that the company's founder, Ren Zhengfei, was a former member of the People's Liberation Army.
But Huawei has strongly denied having close ties to the Chinese state and has stressed that it is 98.6% owned by its workers, with the other 1.4% held by its founder and chief executive Ren Zhengfei.
Although the firm has been prevented from bidding for many US infrastructure contracts, it has been active in the UK after striking a multi-billion pound deal to provide networking equipment to BT in 2005.
A spokeswoman for Huawei highlighted the fact that the government has said it is confident that UK networks using the firm's equipment "operated to a high standard of security and integrity".
She added that her company supported the decision to carry out a review.
The UK's Intelligence and Security Committee (ISC) raised concerns about the company's involvement in the Cyber Security Evaluations Centre in Banbury, Oxfordshire, last month.
"While we recognise that there are some benefits associated with the current staffing arrangements for the Cell, these do not, in our opinion, outweigh the risks of Huawei effectively policing themselves," its report read.
It added that national security was potentially being put at risk by the government's fear of jeopardising trade links with Beijing and it said staff from intelligence agency GCHQ should take over work at the centre.
A Cabinet Office spokesman said: "We take threats to our critical national infrastructure very seriously and need to be responsive to changes in a fast-moving and complex, globalised telecommunications marketplace.
"We have robust procedures in place to ensure confidence in the security of UK telecommunications networks.
"However, we are not complacent and as such we have agreed to the main recommendation of the report to conduct a review of Huawei's Cyber Security Evaluation Centre (the 'Banbury Cell') to give assurance that we have the right measures and processes in place to protect UK telecommunications."
The Chinese firm said that it welcomed the decision.
"Huawei shares the same goal as the UK government and the ISC in raising the standards of cybersecurity in the UK and ensuring that network technology benefits UK consumers," a spokeswoman said.
"Huawei is open to new ideas and ways of working to improve cybersecurity."