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British defence firm BAE Systems could be subject to a US probe into its alleged Saudi Arabian slush fund.

The Guardian claimed this morning that the US department of justice was preparing an anti-corruption investigation under the foreign corrupt practices act.

A BAE spokesperson said the arms firm "was not aware" of any potential Washington inquiry.

In today's report the Guardian quotes a US government source who says he is "99 per cent certain" a criminal inquiry was imminent into allegations BAE paid Prince Bandar £1 billion to secure a lucrative arms deal in Saudi Arabia.

Any potential probe could damage BAE's future contracts with the US government, with the company, the fourth-largest defence firm in the world, aiming to make the Pentagon its biggest customer.

A separate source also told the Guardian that US officials were especially concerned at accusations that Ministry of Defence personnel were aware of the alleged payments.

"The image of all these Bob Cratchits in Whitehall sitting at their high stools processing invoices from Bandar has been a startling one to us," the unnamed US official said.

The fact that BAE used a US banking system to transfer payments to Prince Bandar's accounts in Washington is reportedly behind the department of justice's anticipated decision that its investigative remit does "reach that far".

Although the US department of justice does not publicly announce formal investigations, BAE would be compelled to make an official announcement to the stock market if such a move would taken.

Last December a Serious Fraud Office inquiry into corruption allegations and the rumoured al-Yamamah slush fund was halted by the government on the grounds of both national interest and security.