A study has shown that Skype users in China are being spied on, despite denials from the VoIP firm that this is the case.

The Breaching Trust study (PDF) by Nart Villeneuve at the University of Toronto shows that the authorities are continuously eavesdropping on Skype's Chinese service, TOM-Skype.

This poses a major problem for business and personal users of the service who had assumed that it was secure.

"The log files obtained during the course of the investigation reveal information such as the IP addresses, usernames (and landline phone numbers) used to place or receive TOM-Skype calls, as well as the full content of filtered messages and the time and date of each message," the report said.

"The collected data affects all TOM-Skype users and also captures the personal information of any Skype users that interacted with registered TOM-Skype users.

"This represents a severe security and privacy breach. It also raises troubling questions regarding how these practices are related to the government of China's censorship and surveillance policies."

The report will make worrying reading for businesses that rely on Skype in order to avoid using Chinese state telecommunications.

During the Olympics the US government issued a warning that state surveillance was targeting business intelligence.

The system scans for certain keywords in conversations, including 'democracy', 'Taiwan independence' and 'voice of America'. It also tracks specific user accounts of people under more rigorous surveillance.

Call logs and personal information are then stored on servers owned by TOM, Skype's partner in China.

"Trust in a well-known brand such as Skype is an insufficient guarantee when it comes to censorship and surveillance," the report said.

"This case demonstrates the critical importance of transparency and accountability by providers of communications technologies.

"It highlights the risks of storing personally identifying and sensitive private information in jurisdictions where human rights and privacy are under threat."