A source with direct knowledge of the incident said confidential data of a few people on the watchlist had been 'unwittingly leaked' by a new immigration department employee.

News of the leak came after the Hong Kong government on Tuesday made it clear that visitors seeking to 'disrupt the smooth proceeding' of Olympic activities in the territory were not welcome. Hong Kong will host equestrian Olympics events on behalf of Beijing this August.

The source, who declined to be named, said that an employee who worked at a checkpoint on Hong Kong's border with China had breached guidelines by taking classified data home.

While he did not intend to share the data with anyone, his home computer carried software which allowed outside users to access the files, the source added. The names on the watchlist were retrieved and circulated among Hong Kong netizens.

Hong Kong's immigration department said in a statement that it was still investigating the data breach.

The territory's Secretary for Security Ambrose Lee told reporters on Thursday that he was concerned about the leaked data.

'It's a serious breach,' said democratic lawmaker James To, who is on the legislative council's security panel.

'They are the disciplined forces and they have to protect the security of Hong Kong and now it seems they can't even protect the security of information,' To added.

He said the city now had around 11,000 names on its immigration 'watchlist' of individuals including known criminals who might be barred from the city.

Hong Kong, considered to be China's freest city and highly tolerant of protests, was criticised by rights groups for barring at least six activists, including pro-Tibet campaigners, from entering the city ahead of the Olympic torch relay there last week.

Critics say the former British colony's heightened immigration curbs are a result of pressure from Beijing, which brooks no dissent. -- REUTERS