Ron Dennis may have paid the highest price yet for the spying controversy that engulfed his McLaren team last year - by being demoted from his position as team principal.

According to Spanish daily sports newspaper Marca, the 60-year-old has been forced to stand down from his position within the organisation, to be replaced by current deputy and McLaren CEO Martin Whitmarsh. The paper claims the move came at the behest of engine supplier Mercedes-Benz, which is widely known to have been deeply angered by the scandal and the manner in which Dennis handled it, and has for some time been linked to a complete buy-out of the Woking-based squad.

McLaren-Mercedes was fined a sporting record $100 million USD for its role in the 'Spygate' saga, and thrown out of the 2007 constructors' world championship, which it had disputed with close rivals Ferrari season-long.

Dennis has been in charge of McLaren since the early 1980s, since which time he has led the British outfit to no fewer than nine drivers' and seven constructors' crowns. He owns 15 per cent of the team, with the rest of the equity shared between Mercedes, a Bahraini company and French Saudi Arabian-born entrepreneur and long-time friend and associate Mansour Ojjeh.

If it is indeed true, the news crowns a catastrophic year for Dennis, who earlier this month announced he and his wife Lisa are to separate after 22 years of marriage. Marca added that whilst he may be moved to a different position within the outfit, it would not be a crucial decision-making one.

F1 supremo Bernie Ecclestone, meanwhile, has agreed that the espionage affair badly 'damaged' Dennis, and argued that he could have limited the ultimate fall-out by coming clean about what he knew at an earlier stage.

"He got all the stick, didn't he," the 77-year-old told the Daily Mirror. "That's how it is.

"If he didn't know what was going on, perhaps he should have known, and he should have apologised immediately. If he did know what was going on, he should have apologised immediately too."

Whilst Marca claimed the team would be releasing a press release to confirm the news, however, Mercedes-Benz sought to dismiss the rumours.

"Nothing has changed in the status quo," a spokesperson is quoted as having told adrivo.com.