Saudi Arabia’s £20 billion deal with BAE Systems, the UK’s largest defence company, to buy 72 Eurofighter Typhoons is being held up by the controversy surrounding allegations of bribes paid to Saudi officials.

The Typhoon deal has already slipped from June to July as the Saudis insisted that it should be ratified by Britain’s new prime minister, Gordon Brown, who will take over at the end of June.

Now that allegations have surfaced that BAE paid more than £1 billion to Prince Bandar of Saudi Arabia, defence sources say that the deal, which will help to secure more than 10,000 jobs at BAE, is set to slip into August.

However, they also say there is no chance that the deal will be cancelled despite the embarrassment caused by accusations of corruption in an earlier arms deal between BAE and Saudi Arabia.

BAE is alleged to have channelled up to £30 million a quarter to Prince Bandar, a senior member of the Saudi Royal Family and one of the architects of a 1980s deal to buy Tornado jets from BAE.

The company is also accused of running a £100 million slush fund to entertain Saudi officials and of paying commissions to middlemen who helped to arrange the 1985 al-Yamamah deal.

Al-Yamamah, meaning “the dove of peace”, is the UK’s largest export order in history and has been worth more than £43 billion to BAE since it was signed.

The Typhoon deal, which was agreed last year, will be called al-Salam, or “peace”.

The allegations against BAE wiped nearly £200 million off the company’s value this morning, as its share price fell 5.25p to 433.25p in early trading.

A Serious Fraud Office (SFO) investigation into alleged corruption in the al-Yamamah deal was dropped last December after the Government said the case was a risk to national security.

The SFO is investigating a further six contracts between BAE and foreign governments.

BAE Systems has consistently denied any wrongdoing in the al-Yamamah deal.

It said in a statement this morning that it denied "all allegations of wrongdoing in relation to this important and strategic programme and we will abide by the duty of confidentiality imposed on us by the agreement”.

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