Clotilde Reiss, 24, flew home to Paris on Sunday after an Iranian court commuted a 10-year jail term into a $285,000 fine.
She was accused of aiding a Western plot to topple Iran's clerical regime after taking part in protests following the disputed re-election of President Mahmoud Ahmadinejad last June.
Both she and the French government dismissed the charges, however, a former, senior figure in France's DGSE intelligence service told a television station that she was on its payroll.
"She worked for France collecting information of a domestic political nature as well as information on nuclear proliferation. She is on the payroll of the DGSE," said Pierre Siramy, who worked for the DGSE until late 2009.
But European Affairs Minister Pierre Lellouche angrily dismissed the assertion during parliamentary questions.
"These allegations are fanciful and ridiculous," he said, adding that such accusations "could lead to legal action." Reiss was arrested in Iran on July 1 as she was preparing to leave the country, having spent five months as a teaching assistant in the central city of Isfahan.
She had taken part in anti-government protests following the controversial elections, posting photographs on the Internet and sending emails about the demonstrations.
During her trial, she confessed to writing a one-page report about the unrest that she handed to the French embassy's cultural section and apologised for her "mistakes,” according to a report by Iran's official news agency.
French Foreign Minister Bernard Kouchner said the confession was forced, adding that Reiss had only written a brief note for a cultural institute. He said she had marched with protesters on two different occasions, but had not incited any demonstrations.
Siramy's comments on LCI television stunned political analysts, who warned of possible severe repercussions.
"Siramy ... puts at risk some operational techniques of French foreign intelligence and in one blow renders potentially suspect any French researcher working abroad in a country with a 'difficult' regime," said Claude Moniquet, president of the European Strategic Intelligence and Security Center.
"Furthermore, he puts at serious risk any Iranian citizen who may have been in contact with Clotilde Reiss and against whom these statements could be used in any possible future trial by the prosecutors," he added.
The row came on the day a French court ordered the release of an Iranian serving a life sentence for the 1991 murder of Shahpour Bakhtiar, Iran's last prime minister under the Shah.
French officials have denied suggestions there was any connection between the safe return of Reiss and the release of convicted murderer Ali Vakili Rad.
