Boris Johnson has approved plans to allow Huawei to play a limited role in the UK's 5G network, despite security concerns from the US around the firm's links to the Chinese state.
Mr Johnson defied advice from Donald Trump in making the decision, but admitted the firm was a "high risk vendor".
Downing Street said the pair spoke over the phone and Mr Johnson "updated him on the outcome of the UK’s telecoms supply chain review".
“The Prime Minister underlined the importance of like-minded countries working together to diversify the market and break the dominance of a small number of companies," a spokesperson said.
In a statement announcing the decision, the Department for Digital, Culture, Media & Sport (DCMS) said high risk vendors - such as Huawei - should be "excluded from sensitive ‘core’ parts of 5G and gigabit-capable networks".
There was almost-immediate retribution from the US, with angry politicians from across the American political spectrum voicing their concern at the UK's decision.
Ex-Republican presidential candidate Mitt Romney said the UK is "sacrificing national security" in its decision and Democratic Senator Chirs Murphy said it showed how the US had "never been weaker".
President Trump however is yet to respond.
The government says Huawei's presence in 5G will be limited to no more than 35% in the periphery of the network, known as the access network, which connects devices and equipment to mobile phone masts.
The Prime Minister made the decision following a meeting of the National Security Council and after receiving advice from the UK's security agencies.
But he had been warned by US Secretary of State Mike Pompeo not to let the tech firm play any part in the UK's communications upgrade.
Mr Pompeo labelled the decision on Huawei as "momentous" for the UK and claimed the country's sovereignty would be put at stake if the firm was able to access its data.
But following "technical and security analysis" from the National Cyber Security Centre, the government is "certain" it can block any threats.
It said the implementation of a "tough" new telecoms security framework would "allow us to mitigate the potential risk posed by the supply chain and to combat the range of threats, whether cyber criminals, or state sponsored attacks".
Influential Republican Newt Gingrich described Mr Johnson's decision as a "major defeat for the United Statees (sic)".
He claimed the move to allow Huawei into the UK's 5G shows the US is "losing the internet to China", adding "this is becoming an enormous strategic defeat".
Senator Romney said: "The UK's decision to incorporate Huawei into its 5G network is a disconcerting sign.
"By prioritising costs, the UK is sacrificing national security and inviting the CCP's surveillance state in. I implore our British allies to reverse their decision."
And Liz Cheney, a congresswoman and daughter of former vice president Dick Cheney, said it was "tragic" that the Prime Minister had "chosen the surveillance state over the special relationship".
The concerns are shared across American politics, with Democratic US Senator Murphy tweeting "America has never been weaker. We have never had less influence.
"Not even our closest ally Britain, with a Trump soulmate in Downing Street, listens to us anymore."
And former Tory Party leader Iain Duncan Smith agreed, telling ITV News the decision is a "mistake".
"We have a cyber war going on with China", he said, "they are constantly trying to break into our systems".
"It beggars belief that whilst we know they're trying to mess with our systems as a nation, why we're using an organisation that itself has deep and strong connections to the government in China," he added.
Culture Secretary Baroness Morgan vowed that upgrades would "not be at the expense of our national security".
"We can now move forward and seize the huge opportunities of 21st-century technology," she added.
Huawei's vice president Victor Zhang said the "evidence-based decision" would allow the UK to have "a more advanced, more secure and more cost-effective telecoms infrastructure that is fit for the future".
“Huawei is reassured by the UK government’s confirmation that we can continue working with our customers to keep the 5G roll-out on track," he said.
“We have supplied cutting-edge technology to telecoms operators in the UK for more than 15 years.
"We will build on this strong track record, supporting our customers as they invest in their 5G networks, boosting economic growth and helping the UK continue to compete globally," he added.
But the NCSC stressed that it was "important to avoid the situation in which the UK becomes nationally dependent on a particular supplier".
It added: "Without government intervention, the NCSC considers there to be a realistic likelihood that due to commercial factors the UK would become 'nationally dependent' on Huawei within three years."
Tom Tugendhat, chair of the foreign affairs committee, said there remained "unanswered questions" following the Government's decision to approve Huawei a limited role in the UK's 5G network.
Mr Tugendhat, who is campaigning for re-election as foreign affairs committee chairman, said it would be "near impossible" to bar Huawei's 5G equipment from "sensitive geographic locations", as stipulated by the Government.
Nuclear sites and military bases have been cited as areas deemed "sensitive" by the National Security Council.
Mr Tugendhat tweeted: "The exclusion from 'sensitive geographic locations' seems near impossible to achieve in densely populated areas and in a world of mobile devices.
Despite worries about security, Huawei is considered the industry leader in 5G technology and is much cheaper than its European competitors Ericsson or Nokia.
And, according to ITV News Political Editor Robert Peston, it is trusted by BT and Vodafone - two firms likely to be some of the biggest users of 5G.
Huawei is already involved in the UK's network infrastructure and blocking it from 5G is likely to cause a delay and add cost to the widespread introduction of the network in the UK.