The newspaper said Ecuador employed an global security company and undercover agents to monitor his visitors, embassy staff and even the British police at the embassy in London's luxury Knightsbridge area.
In an exclusive report, the Guardian revealed that the government of Ecuador had spent at least $5 million on intelligence operations as he received visitors ranging from Nigel Farage to individuals linked with Russian Federation.
The snooping was initially meant to protect Assange from the risk of being taken away by British police but later became a full-blown spying operation.
The expense was reportedly signed off by then-president Rafael Correa and later by Ecuadorian foreign minister Ricardo Patiño.
According to a new Guardian report outlining the details of the spy operation created to protect Assange, the Wikileaks founder's hack allowed him to intercept professional and personal communications of the embassy staff and set up his own satellite internet. In 2014, Assange allegedly hacked the embassy's network security, reading the confidential diplomatic material and setting up his own secret communications network.
"By penetrating the embassy's firewall, Assange was able to access and intercept the official and personal communications of staff", the paper said.
WikiLeaks has denied the hacking allegations, calling them libelous.
Assange has been living at the Ecuadorian embassy in London since 2012 to avoid extradition by the Swedish government, where he was wanted for sexual assault.
"The Government of Ecuador warns that the behavior of Assange, with its messages through social networks, puts at risk the good relations that the country maintains with the United Kingdom, with the rest of the States of the European Union and other nations", Ecuador's government said at the time without providing specific examples.
Sweden dropped its investigation a year ago, but British authorities say they still want to arrest him for breaching his bail conditions.
In February, Assange was granted Ecuadorian citizenship in an unsuccessful attempt to register him as a diplomat, thus providing him with immunity that would prevent him from being detained.