Writer and veteran activist Liu Xiaobo said on Thursday that the company had cooperated with Chinese police in a case that led to the 2003 arrest of Li Zhi, who was charged with subverting state power and sentenced to eight years in prison after trying to join the dissident China Democracy Party.

A spokeswoman at Yahoo! Holdings (Hong Kong) Ltd said she had no immediate comment.

The Committee to Protect Journalists and media watchdog Reporters Without Borders called on Yahoo! to disclose information on all internet journalists and writers whose identities it has revealed to Chinese authorities.

Reporters Without Borders said in a statement: "The firm says it simply responds to requests from the authorities for data without ever knowing what it will be used for.

"But this argument no long holds water. Yahoo! certainly knew it was helping to arrest political dissidents and journalists, not just ordinary criminals," it said.

The case is the latest in a string of examples that highlight the friction between profits and principles for internet companies doing business in China, the world's number two internet market.

In September, Yahoo! was accused of helping Chinese authorities identify Shi Tao, who was sentenced last April to 10 years in prison for leaking state secrets abroad.

Yahoo! defended itself at the time, saying it had to abide by local laws, but declined to confirm or deny it had furnished the government with the information.

Internet search giant Google has also come under fire in the last month after it announced it would block politically sensitive terms on its new China site, bowing to conditions set by Beijing.