Australian Federal Police are investigating a CSIRO employee who is suspected of unauthorised use of the organisation's computers.
Fairfax alleges the man is a Chinese national suspected of espionage.
It says the man worked in the organisation's nanotechnology laboratory in Melbourne until last week.
It is understood the investigation surrounds whether he sent sensitive information to a foreign power.
The CSIRO has confirmed it has refereed an employee to police, but will not release further details.
Federal Liberal MP and former CSIRO research scientist Dennis Jensen says he is concerned by the allegations.
"Obviously any industrial espionage is a significant concern," he said.
"It's something clearly that CSIRO is going to have to look at very closely to see what has happened and to ensure that it doesn't happen again."
The AFP says investigations are ongoing and no arrests have been made.
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