The 31-year-old, who is in prison in Singapore after he brought down Barings Bank, is suffering from colon cancer which has extended to his lymph nodes, raising fears that it could infect his vital organs.

Leeson has been moved from Singapore's Changi Prison hospital to Changi General Hospital where his condition is described as "very serious".

Nick Leeson was jailed for fraud following the collapse of Barings Bank in 1995. He had run up losses of £850m on the Far East stock markets.

The former trader has been told he has just a 50-50 chance of survival

He is currently serving a six-and-a-half year prison sentence for his part in the bank's collapse.

His sister Sarah, 21, said: "As far as I am aware the operation is being done to see how far the cancer has spread.

"We are going to find out more after the operation. We will know the results as soon as the hospital knows."

A spokesman for the British High Commission in Singapore said Leeson is in a prison ward of Changi Hospital.

He said: "It is not a prison hospital but it is a secure ward of a public hospital.

"They have better facilities there than at the prison's own hospital. He has got a warder with him. He is effectively still in prison. He is physically locked in.

"He is obviously being watched for any signs of change. His condition is very serious."

Legal moves to secure his early release are continuing and the lawyer acting on his behalf in Singapore said they had already lodged a plea on medical and compassionate grounds.

Lisa Sims: Her thoughts are with her ex-husband Nick Leeson

Under Singaporean law, sentences can only be commuted by a direct pardon from the state's president, Ong Teng Chong, who is also suffering from cancer of the lymphatic system.

Leeson's ex-wife Lisa Sims has postponed her wedding to her new love after learning about his battle with cancer.

Lisa Sims, who reverted to her maiden name after they separated, was with Leeson when he was arrested in Frankfurt en route to London.

She stood by him as he fought extradition proceedings to Singapore, but the couple began to lose contact in 1996 before finally divorcing last October.

Ms Sims, 30, said she was in "deep shock" after hearing of her former husband's illness.

She was due to marry Keith Horlock, from Benfleet in Essex, in a luxury mansion house in Bexley, Kent on Saturday August 15.