China’s state broadcaster has been stripped of its licence to air in the UK after an investigation by the media regulator found that the network is editorially controlled by the Chinese Communist party.

Ofcom on Thursday said it had concluded that Star China Media Limited, the entity that held the licence to broadcast in the UK as China Global Television Network, was a front with no editorial control over programmes.

Sky and Freesat, which carry the channel in the UK, were on Thursday morning both taking steps to pull CGTN off air.

The move is likely to heighten tensions between China and the UK, which has criticised Beijing for its crackdown on Hong Kong’s pro-democracy movement and offered a path to citizenship to up to 3m residents of the territory.

On Thursday China’s ministry of foreign affairs accused the BBC of producing “fake news” on January 29 regarding Beijing’s handling of Covid-19, demanding that the UK public service broadcaster make a “public apology”.

“China reserves the right to take further measures,” the statement concluded.

The BBC said it stood by its “accurate and fair reporting of events in China and totally reject these unfounded accusations of fake news and ideological bias".

Ofcom’s rules prohibit governments from holding broadcasting licences. It said it had offered CGTN a chance to put up a firewall between the government and the corporation that controls the international arm of the state broadcaster but argued it had failed to do.

“We are unable to approve the application to transfer the licence to China Global Television Network Corporation because it is ultimately controlled by the Chinese Communist party, which is not permitted under UK broadcasting law,” Ofcom said, adding that the licence had been held by an entity “which has no editorial control over its programmes”.

“We’ve provided CGTN with numerous opportunities to come into compliance, but it has not done so. We now consider it appropriate to withdraw the licence for CGTN to broadcast in the UK,” it added.

Ofcom rules permit state-funded broadcasters such as Russia’s RT to air in the UK, as long as the entity that holds the licence can show that it is separate from the government.

The last time it took similar action was in 2012, against an Iranian broadcaster.

The ruling is the latest blow to the Chinese state broadcaster, which in recent years has faced growing scrutiny in both the UK and US, where it has been forced to register as a foreign agent, as it has pushed to grow its international network.

The broadcaster has made a big bet on the UK, choosing London for its third main global office alongside bases in Washington and Nairobi. It has recruited hundreds of journalists to report “objective” news “from a Chinese perspective”.

CGTN did not immediately respond to a request for comment. Staff at its European headquarters in west London had on Thursday morning yet to receive any clarification from management, according to one employee.

Beijing has in the past taken steps to expel journalists at US-based organisations in retaliation for Washington’s tightening rules regarding CGTN and other state-backed Chinese media outlets, prompting concern that the BBC could face further action.

CGTN’s UK licence had allowed it to broadcast across the EU, even after Brexit. The network has been exploring other opportunities but has yet to secure a licence in another European country, a process that has been complicated by probes by regulators in the UK and US.

In July, Ofcom announced that CGTN had been in “serious” breach of its rules on fair treatment and privacy after it aired allegedly forced confessions. This came two months after the regulator determined it had breached impartiality rules, when CGTN failed to present alternative viewpoints to that of Beijing after separate investigations into its coverage of pro-democracy demonstrations in Hong Kong.

Ofcom has not yet announced sanctions for these breaches — the loss of its licence was a potential consequence, as are fines — but is expected to do so soon.