The Home Secretary and MP for Redditch insisted she was not told in advance about plans to arrest Conservative frontbencher Damian Green – but said she would not have stopped the arrest.
Her statement to the Commons followed the admission this week by Michael Martin, the Commons speaker, police had not been asked for a warrant before they were allowed to search the Commons offices used by Mr Green, the Tory immigration spokesman.
Ms Smith was challenged by Birmingham MP John Hemming (Lib Dem Yardley), who said the Home Office had a legal duty under the Freedom of Information Act to supply the information which had been “leaked”.
David Winnick (Lab Walsall North) said he was concerned the police action undermined the ability of MPs “to carry out our Parliamentary duties without fear or favour.”
He added: “When that is undermined, democracy is undermined.”
Ms Smith said, in the face of sustained leaks, it had been necessary to prevent further sensitive material being made public.
“The sustained level of leaking that had taken place clearly suggested this could go on, would escalate, and more information of greater sensitivity could potentially leak,” she said.
The Home Secretary revealed she agreed with the senior civil servant at the Home Office, permanent secretary Sir David Normington, it was “essential” to bring in the police after previous internal inquiries failed to identify the source of the leaks.
On November 19, junior civil servant Chris Galley was arrested, followed by Mr Green at his home in Ashford, Kent, eight days later.
Ms Smith insisted she did not know the arrest was planned but added: “Even if I had been informed, I believe it would have been wholly inappropriate for me to seek to intervene in the operational decisions being taken by the police.”
Shadow Home Secretary Dominic Grieve, accused the home secretary of trying to wash her hands of responsibility.
“This episode has nothing to do with national security and everything to do with political embarrassment,” he said. “It heralds a systematic breakdown in trust between officials and ministers arising from the Home Secretary’s willingness to conceal failings in her department on matters of manifest public interest.
“Seeing what is now emerging, does the Home Secretary regret her willful ignorance in this whole affair and the decision to wash her hands of the basic responsibilities that come with her office?”
Mr Martin has announced that a committee of MPs will be formed to investigate the affair.