The Nation quoted an unnamed security official describing how the "undercover operatives were busy in mysterious activities on bicycles" near Phalina Dam, a picturesque spot known for its rugged mountain views.
A spokeswoman for DfID in Pakistan said officials were investigating why the pair had not complied with local regulations but said it was an innocent cycling trip.
"They work for DfID. They are categorically not spies. They were just out on a bike ride at the weekend," she said.