The US Office of Personnel Management (OPM) said on Thursday that personnel information of about 4 million current and former federal employees were compromised as a result of a massive cyber attack.
The Federal Bureau of Investigation (FBI) started a probe into the hacking and security officials speaking on the condition of anonymity said they suspect China to be behind the attack.
Senator Susan Collins (R-ME) also said China is believed to be behind the attack.
Chinese Embassy in Washington responded to accusations saying "Jumping to conclusions and making hypothetical accusation is not responsible, and counterproductive," in a statement by Embassy spokesman Zhu Haiquan.
"The FBI is working with our interagency partners to investigate this matter," the bureau said in a statement.
The OPM conducts the background checks and stores the personnel information of the federal employees including names, social security numbers and birthdates.
The agency urged the likely victims to check their credit reports and financial transaction as the US Federal Trade Commision (FTC) published a guideline to assist necessary steps to be followed by current and former federal employees to prevent any further damage.
The OPM discovered suspicious activity on its IT systems and an FBI-led investigation determined in May that the agency data was compromised, prompting implementation of additional security precautions.
The OPM is the latest US federal agency to fall victim to cyber attacks as the State Department and US Postal Service were hacked in the past as part of an increasing flux of cyber attacks at US government institutions.
The US has blamed North Korea and China for most of the past attacks but both countries repeatedly denied any involvement.
The US has blamed also Russia for a cyber attack that stole tax return records of 100,000 Americans. Russia denied the claim.
"It's clear that a substantial improvement in our cyber databases and defenses is perilously overdue," the ranking Democrat on the House Permanent Select Committee on Intelligence US Rep. Adam Schiff, said in a statement after the OPM revelation.