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It follows the defection of Soviet double-agent and KGB chief Oleg Gordievsky to the West.
He gave British security services an unprecedented amount of information about Soviet agents operating in the UK. In fact he had recently been appointed head of the KGB in London in charge of the USSR's whole spy operation in Britain.
He is the highest-ranking KGB espionage source to be identified and his defection was described by Foreign Secretary Sir Geoffrey Howe as "a very substantial coup for our security forces".
The Foreign Office revealed that Mr Gordievsky had been a double agent since 1966. He was persuaded to work for the Danish intelligence service soon after the KGB posted him to Copenhagen posing as a press attaché.
Three Soviet diplomats were expelled from Denmark in 1977 thanks to information he gave to the Danes.
In 1982 the KGB sent him to London as a "counsellor" for the Soviet Embassy when he began working for MI5.
Mr Gordievsky's revelations are a severe blow to the KGB, but MI5's greatest asset is also gone.
It is believed he is behind the expulsion of several other Soviet diplomats in the last few years.
He is now in the hands of British security, along with his wife, after requesting asylum some weeks ago. Precise details of his defection remain unknown.
Fears for Anglo-Soviet relations
The British Government had expected some kind of retaliation but was surprised by such a tough response as this is the first time Moscow has sent out an equal number of foreigners in reprisal.
There was a flurry of activity in Whitehall when news broke of the Soviet tit-for-tat expulsions.
Sir Geoffrey held meetings with Foreign Office and security service officials to discuss Britain's next move and the impact on Anglo-Soviet relations.
President Mikhail Gorbachev and Prime Minister Margaret Thatcher have developed a certain personal rapport that has boosted trade between the two countries.
But the current crisis could undermine Anglo-Soviet relations.
In a statement Sir Geoffrey said: "We utterly condemn this unjustified action directed against British businessmen and journalists, as well as embassy staff."
Although the embassy in Moscow has been hit hard - 18 of their 43 diplomats have been told to pack their bags - only two of the 25 people expelled were businessmen. Analysts suggest this means President Gorbachev wants to maintain the trade links that bring in much-needed hard currency.
Two days later the British government ordered the expulsion of a further six Soviet officials and lowered the ceiling on the number of officials allowed to work in the UK from 211 to 205.
On 18 September the USSR expelled six more Britons at which point UK Prime Minister Margaret Thatcher announced a halt to the tit-for-tat expulsions.
Some months later details of Mr Gordievsky's dramatic defection emerged.
His KGB bosses in Moscow had suspected him of betraying his country in May 1985 and summoned him back to Russia for interrogation.
He then contacted his "handlers" who helped him get to the British Embassy. From there he escaped to Finland in the back of a van.
After the British secret service had interrogated him he was flown to the UK with his family. He has since written books detailing the operations of the KGB.
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