Mr Straw admitted on Monday he had known about the spying allegations against the great-grandmother since December 1998.

Shadow Home Secretary Ann Widdecombe said Mr Straw's handling of the affair had been a joke.

Mr Straw has ordered an investigation into MI5's handling of the spy scandal surrounding the 87-year-old in a statement on revelations of Cold War espionage in the UK.

The home secretary said he was informed last year of the existence of Mrs Norwood, who spied for the Soviets for more than 40 years.

But the last time it would have been possible to prosecute Mrs Norwood would have been in 1992, his statement said.

Ann Widdecombe: "Straw should have given details earlier"

The attorney-general ruled earlier this year that no criminal investigation was possible, the home secretary said.

She told BBC Two's Newsnight: "We still need to know how many people are involved in this; what are their identities; what was the order of magnitude of their crimes; why has it been decided not to prosecute.

"It's not right that someone betrays their country and is not fully exposed for that."

Mr Straw's statement on Monday raises questions over the effectiveness of Mrs Norwood as a spy, saying that she had come under suspicion because of her Communist sympathies since 1945 and her vetting clearance was revoked in 1951.

New measures to increase oversight of MI5's handling of spy cases will include an annual report to ministers on cases under consideration.

Mr Straw released the statement after a meeting with the head of MI5, Stephen Lander.

The home secretary said he was inviting the cross-party Commons Intelligence and Security Committee to investigate the secret service's handling of the archive brought to the UK by KGB defector Vasili Mitrokhin.

The BBC's Jon Silverman: "This lifts the lid on an extraordinary story"

He promised to publish "as much as possible" of the report.

Mr Straw said the decision to publish the information brought over by Mr Mitrokhin by way of a book was taken by the previous government with the full consent of then foreign secretary Sir Malcolm Rifkind.

The news that Mr Straw received information about Mrs Norwood last year, contrasts with the statement made by Downing Street saying Prime Minister Tony Blair only became aware of her existence just before media reports appeared.

Former MPs named as spies

Mr Straw's statement came as two former Labour MPs were also named as Soviet agents.

John Symonds: "Romeo agent"

Tom Driberg and Raymond Fletcher, who are both now dead, are the latest Cold War spies to be named from files brought to the UK by Mr Mitrokhin.

Mr Driberg, who was MP for Barking, East London, was known by the codename of Lepage, while Mr Fletcher, then MP for Ilkeston, Derbyshire, was codenamed Peter, according to the files Mr Mitrokhin smuggled into the UK in 1992.

A former policeman, John Symonds, has also admitted he was a "Romeo agent", sleeping with women from foreign embassies to gain secrets for the KGB in the 1970s.

Shadow Home Secretary Ann Widdecombe has said it was "inexplicable" that the spies had not been prosecuted.

But John Wadham, director of civil rights group Liberty, said it was too late to prosecute Mrs Norwood and other spies now being unmasked.

He said: "The authorities' failure to take action years ago means it's now too late to prosecute them without jeopardising their right to a fair trial under the European Convention on Human Rights."

The revelations came to light when a BBC team was researching the forthcoming documentary The Spying Game.