Prime Minister Boris Johnson is under intense pressure from US President Donald Trump to prevent Huawei from playing a role in building Britain's 5G telecoms network on grounds of security.
Asked in an interview with the FT if the intelligence-sharing relationship could be harmed, MI5 director general Andrew Parker said: "I've no reason today to think that.
"Perhaps the thing that needs more focus and more discussion is how do we get to a future where there's a wider range of competition... than defaulting to a yes or no about Chinese technology," added Parker, who is standing down in April.
Responding to the interview, Johnson's spokesman said: "When a decision has been made we will provide an update to parliament.
"We have a close and longstanding security and intelligence sharing relationship with the US and that will continue."
The spokesman confirmed that British and US "national security officials" were holding a meeting Monday in London following a report that the talks were a last-ditch bid by Washington to stop Huawei playing a role.
Fifth-generation (5G) mobile communications are the next milestone in the digital revolution, bringing near-instantaneous connectivity and vast data capacity.
They will enable the widespread adoption of futuristic technologies such as artificial intelligence and automated cars and factories -- advances Beijing is desperate to lead.
Huawei's status as a major world supplier of the backbone equipment for telecoms systems gives China an inside track -- but it has also attracted suspicions.
Various countries have raised security concerns about Huawei technology, with the United States and Australia barring the firm from participating in their 5G networks and others hesitating to let it in.
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