The disclosure, the latest twist in the Litvinenko affair, provides "new insight into the extent of Litvinenko's links with MI6 and the suggestion that he was killed by a Russian spy", The Sunday Times said.
Litvinenko, a 43-year-old former FSB officer, turned critic of the Kremlin and moved from Russia to Britain in 2000 where he claimed asylum.
He was poisoned with the toxic radioactive isotope Polonium-210 in London in 2006, shortly after he was granted British citizenship.
Citing Marina Litvinenko, the widow of the former KGB agent, the newspaper said that payments from British intelligence began in late 2003 or early 2004 when 18,000 pounds ($27,000) were deposited in the couple's bank account.
MI6 also gave Litvinenko a fake passport, the newspaper said citing the transcripts of the widow's statements to British detectives in November 2006, which were made public only now.
From 2004 onwards, Litvinenko received a retainer of around 2,000 pounds ($3,000) a month from MI6.
The report said "the payments continued until March 2007, four months after his death from poisoning by polonium-210".
Britain's long-awaited inquest into the death of Litvinenko has been delayed by five months until October.
Earlier this week, Andrei Lugovoi, a former officer of Russia's Federal Security Service (FSB) suspected by the British authorities of poisoning Litvinenko said that he will pull out of the inquest into the killing, blaming political pressure from London.