The decision comes as governments increase their scrutiny of Huawei equipment ahead of rolling out 5G, the next generation mobile communication technology that promise faster download speeds and better connections.
BT will pull Huawei equipment out of its core 4G network within two years to fit its own internal policy.
"In 2016, following the acquisition of EE, we began a process to remove Huawei equipment from the core of our 3G and 4G mobile networks, as part of network architecture principles in place since 2006", BT said.
Australia, Canada, New Zealand, the UK and the US are members of the UK-USA Agreement - dubbed the Five Eyes spy network - which allows for collaboration on signals intelligence. As a result, Huawei has not been included in vendor selection for our 5G core. Huawei's "enhanced packet core" technology is still at the core of EE's 4G network today.
We reported last month that Washington was pressuring allied countries to drop Huawei over suspicions of its ties to the Chinese government, and it seems to have worked.
Huawei will still be enabled on its 5G Radio Access Network.More news: David Attenborough's Dire Climate Warning: ‘Our Greatest Threat In Thousands Of Years'
More news: Virat Kohli dancing down the track is pure eargasm!
More news: Epic Games launches online store to compete with Valve's steam Store
"It's not about the country, it's not even particularly about the company, it's about the technology that is proposed", New Zealand's intelligence agency minister Andrew Little said.
This latest blow for Huawei will also see the firm excluded from bidding for contracts to supply equipment for use in BT's core 5G network, although BT will continue to use the firm's kit in "benign" parts of its network, such as equipment on masts.
The Wall Street Journal said the United Kingdom government is now reviewing the makeup of its telecommunications equipment market.
"We need to decide the extent to which we are going to be comfortable with Chinese ownership of these technologies and these platforms in an environment where some of our allies have taken a very definite position", he said.
"This is a normal and expected activity, which we understand and fully support", it said in a statement.
The report said the Chinese government could force companies to make products perform below expectations, facilitate "state or corporate espionage" or compromise the confidentiality of networks using them. BT reports offering various services in around 180 countries.