The developments were revealed during a heated exchange between Foreign Minister Melanie Joly and the parliamentarian who was targeted, Michael Chong, during her testimony before a Commons committee looking into allegations of Chinese interference in Canadian affairs.
While being questioned by Chong, who has called for the Chinese diplomat in question to be kicked out of the country, Joly said her deputy minister was "right now meeting with the Chinese ambassador after summoning him."
"We're assessing different options including the expulsion of diplomats," she added.
Chong has led an outcry following a damning report this week by the Globe and Mail claiming the government turned a blind eye to Beijing's interference in Canadian affairs.
Citing classified documents and an anonymous security source, the newspaper said China's intelligence agency had planned to target Chong and his relatives in Hong Kong with sanctions for having voted in February 2021 for a motion condemning Beijing's conduct in Xinjiang as genocide.
This was "almost certainly meant to make an example of this MP and deter others from taking anti-PRC positions," it cited a Canadian Security Intelligence Service document as saying, using an acronym for the People's Republic of China.
A diplomatic official at China's consulate in Toronto was said to be involved in the intrigue.
"This person needs to be declared persona non grata immediately," Chong told reporters in Ottawa on Wednesday.
Canadian Prime Minister Justin Trudeau has faced growing pressure to take a hard line with Beijing following revelations that China sought to sway the outcomes of Canada's 2019 and 2021 elections.
The accusations, which Beijing has denied, have become the focus of ongoing parliamentary committee hearings and investigations by Canada's elections agency.
Federal police have also dismantled several illegal Chinese police stations in Canada allegedly set up to harass Chinese expatriates.
In response to Chong's accusations, Chinese foreign ministry spokeswoman Mao Ning said: "China has always opposed any country interfering in other countries' internal affairs."
"We have never and have no interest in interfering in Canada's internal affairs," she added.
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