The Israeli secret service spied on Jörg Haider, the right-wing Austrian populist, using one of his closest aides to gather information on his contacts with Arab dictators. Peter Sichrovsky said that he had been a Mossad informant for five years until retiring from politics in 2002.

"I wanted to help Israel and certainly did not do anything wrong," said Herr Sichrovsky who was secretary-general of Herr Haider's Freedom party and a member of the European Parliament. The Austrian state prosecutor said yesterday that he would open an investigation to determine whether Herr Sichrovsky should be prosecuted. Spying for a foreign power carries a jail sentence of up to three years in Austria.

The revelations, in the news weekly Profil, stunned the Austrian political class. Herr Sichrovsky, who is of Jewish origin, was a controversial figure for the conservative Right. The Jewish community regarded him as a traitor for working with Herr Haider, while anti-Semitic Freedom party activists made no secret of their distrust.

The Freedom party became a member of Austria's governing coalition in 1999, prompting a diplomatic boycott by the European Union. Herr Haider had publicly praised the SS and Hitler's employment policies. Israel withdrew its ambassador.

Herr Sichrovsky was supposed to help Herr Haider to make peace with the Jewish community. But at the same time the Israeli secret service was anxious to know what Herr Haider was up to.

"I was certainly not a James Bond," said Herr Sichrovsky, now a businessman concerned with military co-operation between Israel and China. "It's true, though, that I co-operated with Mossad until my withdrawal from politics in 2002."

Herr Haider had extensive contacts with Colonel Muammar Gaddafi, the Libyan leader, and enjoyed a close friendship with one of the dictator's sons. "Israel wanted to use Haider as a bridge to Arab countries with which it did not have official contacts," Herr Sichrovsky said.

His ties with the Israelis went well beyond occasional debriefings. In the autumn of 2000 Herr Sichrovsky held talks with Syrian politicians about the fate of three Israeli soldiers captured by Hezbollah in Lebanon. He was accompanied by Herbert Scheibner, the Austrian Defence Minister, who was also a member of the Freedom party. The idea was to demonstrate to both the European Union and to Israel that Austria was a respectable member of the world community.

Herr Sichrovsky helped to arrange secret meetings in Austria between Israeli and Palestinian negotiators. Yesterday he claimed to have set up Herr Haider's controversial visit to Baghdad to meet Saddam Hussein in 2002. At the last minute Herr Sichrovsky was denied an Iraqi visa so he could not pass on first-hand information to Mossad. "They were, in any case, sure that Haider was meeting a double," he said.

Herr Haider remained calm yesterday. He said: "There were always people in the party who warned me that he'd been sent by Mossad but there was never anything concrete. If he was really sent by a secret service, then he must have given them very little."