Madhuri Gupta working as second secretary in the high commission's press section was arrested after having been summoned to Delhi for “consultations in connection with the Saarc summit” currently being held in Bhutan.
Posted in Pakistan in August 2007 she left Islamabad on April 21.
Political analysts are of the opinion that the arrest may affect efforts being made for normalisation of relations between Pakistan and India strained since the Mumbai attacks.
According to sources, Ms Gupta's colleagues in the mission started suspecting her about six months ago because of “extraordinary interest” she started taking in matters not related to her job. They said that some of her Indian neighbours in the diplomatic enclave had seen her with “mysterious people”.
Sensing that her activities were being noticed she relocated to a posh residential sector in Islamabad. The move was reported to have been opposed by the high commission's administrative wing.
Although Indian agents in Islamabad had been trailing her for months, her surveillance, including the tapping of telephone calls and scanning of her email, was increased after her relocation.
However, it could not be ascertained if the diplomat was involved in leaking any crucial information or was instrumental in facilitating intelligence operations of the spy agency inside the mission.
The arrest has led to speculations that the diplomat might not have been acting on her own and there could be a larger racket at work in the mission.
According to Indian media reports, New Delhi has already launched a hunt for her collaborators.
RAW's station chief in Pakistan, Rajinder Kumar Sharma, posted in Islamabad as a counsellor in economic and commercial wing, is said to be a close friend of Ms Gupta who frequented his house. Indian media has accused Ms Gupta of collecting information from Mr Sharma and passing it on to her contacts. Indian high commission officials over the weekend rummaged through Ms Gupta's home in her absence and seized several items. The chief of the mission's security later left for Delhi with the material for assisting the probe against his former colleague.
Ms Gupta is not the first Indian diplomat to have been accused of spying for Pakistani agencies. In the 1980s, an Indian military attachÃ© posted in Islamabad faced a similar charge. The military official was sent back but wasn't tried for espionage.