Chinese hackers are believed to have broken into US government computer networks to steal the sensitive details of four million federal workers.
The Department of Homeland Security admitted the 'shocking' breach yesterday with one security expert calling it an 'attack against the nation'.
It is now feared the stolen data could be used to blackmail, defraud or impersonate federal employees - and the FBI has launched an investigation.
An unnamed US official claimed the hack of the Office of Personnel Management (OPM) has the potential to affect every federal agency - including intelligence services and President Obama's office.
The OPM, the government's human resources department, handles hundreds of thousands of sensitive security clearances and background investigations on prospective employees each year.
It's estimated that there are about 4.2 million federal employees, including 1.5 million who serve as uniformed military personnel.
The Washington Post has cited government officials as saying that Chinese hackers were behind the breach, which took place at the beginning of May.
But the Chinese Embassy in Washington has dismissed the claims as 'irresponsible', stating that such attacks would not be allowed under Chinese law.
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