The police operation that led to an officer being planted among environmental activists for at least seven years risks undermining public confidence in undercover intelligence gathering, a former director of public prosecutions warned.

Lord Macdonald of River Glaven said undercover policing was an “absolutely essential resource” and had resulted in many criminal convictions.

His comments follow the disclosure that PC Mark Kennedy spent years at the heart of a loose network of campaigners behind a series of protests.

A trial of six protesters accused of conspiring to shut down Ratcliffe-on-Soar power station, in Nottinghamshire, collapsed after prosecutors dropped the case amid claims from the defendants that PC Kennedy had offered to support them.

Security minister Baroness Neville-Jones told peers at question time in the House of Lords that Nottinghamshire Police had referred the case to the Independent Police Complaints Commission (IPCC) and was considering which body could look into the “wider lessons”.

Liberal Democrat Lord Macdonald said: “Undercover policing is an absolutely essential resource that has resulted in many dangerous criminals and criminal gangs being brought to justice thanks in large part of the courage of the individuals involved in that work and therefore it would be an enormous pity if public confidence in this technique were to be diminished or undermined. Labour home affairs spokesman Lord Hunt of Kings Heath said there “ought to be a wider review” and called for a reassurance the results would be made public.

Lady Neville-Jones said Nottinghamshire Police were discussing a review with the Association of Chief Police Officers and the Her Majesty’s Inspectorate of Constabulary and she “thought this was a matter that would be made public”.