Barrie Trower, 68, says he was recruited by M15 to work as a spy in the education department of Wormwood Scrubs jail in the 1960s and 1970s.
His role was to secretly record details of senior politicians, top police officers in the Met and high-ranking civil servants who had links with inmates.
The former science teacher claims he pooled together a string of damning facts from unsuspecting inmates – including teenage rent boys.
Many of them admitted spending weekends with MPs, taking part in spa trips and weekend breaks.
Barrie also says he saw and heard officials including MPs contacting teenagers in the prison to try and buy their silence by offering to get them freed.
He claims his information including letters and phone calls between inmates and VIPs was part of the Westminster child abuse dossier which went missing in the 1980s.
Barrie says that during his time at the prison, between 1967 and 1978, he passed on the intimate details of 16 VIPs, whose extra-curricular activities were disclosed to him.
He added that one of the accused politicians – who he named – was a household figure who has since died.
Barrie, of Newton Abbot, Devon said he was working as a teacher and scientist when he was approached to take on a job as a PE teacher and spy at the jail in 1967.
He said: “My main job was to obtain information from these vulnerable youngsters about paedophile activity within the establishment.
“I was trained over about a 14 month period to just listen and gather information that could be useful for MI5 and MI6 whilst I was teaching.
“I would have to be on the lookout for paedophiles and homosexuals and especially those within the establishment, for example police officers, civil servants and MPs.
“There were around 233 boys and girls that I was responsible for. There were a group of the boys, who I would describe as “pretty boys”, many of them were rent boys.
“They would talk about very famous faces who had been at parties and events messing around with these boys, many of them were between 11-15.
“Ministers, police and civil servants, many of them known to the public were known by the public.
“Often the boys would get phone calls from these people, which obviously have to be logged, as well as letters which again we kept records of.
“They would have messages from MPs and Civil Servants saying things like: ‘You won’t do the full two year sentence, I’ll make sure you’re out in 16 weeks’.”
Mr Trower started working at the prison as a physical education teacher in 1967.
He had been working as a science teacher and research scientist but was approached by the Government to take on a spying role in the prison.
As part of his role he was trained to detect spies, paedophiles and homosexuals and would give daily verbal revelations of links between inmates and VIPs.
Barrie explained the information he disclosed was passed on to four security officers who then handed the information on to MI5.
The revelations were then collated into 114 files which has since gone missing in a suspected cover-up.
He said: ”I would speak to the boys on a daily basis and they would start to name drop.
“I said to them that it must be nice to have friends like that and they would say ‘they drive me around in their Jaguars, teach me how to swim and take me to saunas’.
“I was well trained – I know blackmail when I see it and those rent boys were being blackmailed.”
The Home Office is facing calls to explain why a 1980s dossier about alleged paedophiles at Westminster was “destroyed” by officials.
The document was handed to then Home Secretary Leon Brittan by Tory MP Geoffrey Dickens.
Lord Brittan passed concerns in it to the relevant authorities, but the file itself was not kept.
Labour MP Simon Danczuk said it may contain evidence that would identify child sex abusers.
The Home Office said a 2013 review found the “credible” elements of the dossier which had “realistic potential” for further investigation were sent to police and prosecutors.
It added that other elements in the report were either not retained, or were destroyed.
Barrie says the only person he will disclose the MP names to is judge Dame Elizabeth Butler-Sloss who is leading a non-statutory inquiry into the affair.
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