By Paul Sandle and Kylie MacLellan
LONDON (Reuters) - Prime Minister Boris Johnson on Tuesday defeated his first party rebellion over a government decision to allow China's Huawei [HWT.UL] to have a role in building Britain's 5G phone network.
Huawei, the world's biggest producer of telecoms equipment, has been caught in a stand-off between Washington and Beijing after the United States accused it of spying on Western secrets, allegations which the company has denied.
Britain decided in January to allow Huawei into what the government said were non-sensitive parts of the country's 5G network, capping its involvement at 35%.
This angered the United States, which wants to exclude Huawei from the West's next-generation communications systems and has urged Britain to rethink.
Some senior Conservatives shared the U.S. unhappiness. They wanted Huawei eliminated entirely from Britain's 5G networks by the end of December 2022.
The government tried to placate the rebels by saying it would work towards increasing the supply of 5G telecoms gear so operators would not need to use Huawei, but it refused to commit to any timetable to ban the Chinese company.
It was not enough, however, and the rebels pushed their plan to a vote.
The government, which has an 80 seat majority, won by 24.
Digital Infrastructure Minister Matt Warman said the government had "heard loud and clear the points made on all sides of the house".
Bob Seely, one of the rebels, signalled the group would continue to pursue their cause, describing the vote as "a strong first showing" in a posting on Twitter.
The rebels wanted to amend the Telecommunications Infrastructure Bill to ensure that companies termed by British security experts as "high-risk vendors" - such as Huawei - were stripped out of networks completely by the end of 2022.
The government said it did not want high-risk vendors to have any role, but in a market dominated by three players, Huawei, Sweden's Ericsson <ERICb.ST> and Finland's Nokia <NOKIA.HE>, some network operators were relying on Huawei.
"We would like to get to the point where we won't need to have any high risk vendors at all," digital minister Oliver Dowden told parliament.
Huawei vice president Victor Zhang said the company had been "reassured" by the government's decision in January, which would "result in a more advanced, more secure and more cost-effective telecoms infrastructure".
"An evidence-based approach is needed, so we were disappointed to hear some groundless accusations asserted," he said. "The industry and experts agree that banning Huawei equipment would leave Britain less secure, less productive and less innovative."
Conservative lawmaker Iain Duncan Smith, who put forward the amendment, said he wanted a clear timetable from the government on its plan to completely remove high-risk vendors.
"I am always flexible on the date, providing the intent and commitment to eradicate the involvement of high risk vendors from our system, across the board, full stop," he said.
Dowden said the government would work with international partners to increase the choice of vendors during this parliament, which is due to end in 2024.
While the Conservative rebels failed to change government policy, they fired a sizeable warning shot across the newly-installed government's bows.
Mike Rake, the former chairman of broadband and mobile company BT <BT.> and an adviser to Huawei, said the Chinese firm has a vital role in building the 5G network Britain needs.
"Any attempt to further restrict Huawei 5G equipment, or to remove existing 4G equipment, will not only incur very significant costs but prejudice trade relationships with China and will significantly set back the government's broadband ambitions," he said in an open letter.
"This, in turn, will further damage our competitiveness as an economy at what is a critical moment."
Britain is in the process of negotiating new trading relationships, having left the European Union.
(Additional reporting by Elizabeth Piper, Editing by David Goodman and Alexander Smith)