Ecuador has asked the UK to help an investigation over alleged spying at its embassy in London where Wikileaks founder Julian Assange is living.
Ecuador named a British company it claimed planted a listening device in their ambassador’s office but this was denied.
Mr Assange has been staying at the embassy to avoid extradition to Sweden.
He is wanted there for questioning over allegations by two women of sexual offences – which he denies.
Foreign Minister Ricardo Patino told a news conference in Quito the bug was found last month when Ecuadorean technicians reviewed the embassy’s wiring.
The purpose of the bug, which was hidden inside an electrical socket, was to listen to the conversations of Ambassador Ana Alban in her office, Mr Patino said.
Mr Assange lives and works in a different room in the embassy.
Mr Patino said: “We have reason to believe that the bugging was carried out by The Surveillance Group Limited, one of the largest private investigation and covert surveillance companies in the United Kingdom.”
The system worked with a Sim card and could be activated by a call from any mobile or fixed-line phone, he added.
The Surveillance Group, which is based in Worcester said Mr Patino’s allegation was “wholly untrue”.
Chief executive Timothy Young said: “We have this morning heard an accusation the source of which is apparently Ricardo Patino, the Ecuadorean foreign minister suggesting that we have bugged the Ecuadorean embassy.
“This is completely untrue. The Surveillance Group do not and have never been engaged in any activities of this nature.
“We have not been contacted by any member of the Ecuadorean government and our first notification about this incident was via the press this morning.”
The UK and Ecuador have failed to reach agreement on how to deal with Julian Assange, who faces arrest if he leaves the Ecuadorean embassy.
Mr Patino wants the UK to guarantee Mr Assange safe passage to Ecuador, but the UK maintains it has a legal obligation to extradite him to Sweden.