Saudi Arabia’s Ambassador to the United States has returned to Riyadh after resigning abruptly because his posting was not renewed by King Abdullah.

Prince Turki al-Faisal, the former Ambassador to London and ex-intelligence chief, had been in Washington for only 15 months when he announced suddenly this week that he was stepping down.

His brusque departure from Saudi Arabia’s top diplomatic job triggered speculation of a rift between Washington and Riyadh.

The White House was forced to deny yesterday reports that King Abdullah had threatened to provide financial backing to Iraq’s Sunni community if America pulled its troops out of Iraq. Iraq’s Sunni Muslims, Saudi Arabia’s traditional allies, have lost their hold on power in the aftermath of the US-led invasion.

Riyadh is very concerned that the current review of US policy in Iraq will lead to the withdrawal of US forces and feels that its interests have not been adequately taken into consideration by Washington.

The message, delivered to Dick Cheney, the Vice President, during his recent visit to the kingdom, implied that Saudi Arabia would be prepared to support the Sunni insurgency against the Shia militias in Iraq, which are backed by Iran. The move would almost certainly plunge Iraq into all-out civil war that could spread through the region.

Yesterday the White House insisted that Saudi Arabia was not changing policy and was still committed to a “self-sustaining Iraq”. But there is growing pressure on the Saudi Royal Family to come to the defence of Iraq’s once-dominant Sunni Arabs. On Monday, 30 prominent Saudi clerics called on Sunnis around the region to support their brethren in Iraq.

Prince Turki’s resignation also hinted at splits within the ranks of the secretive Saudi Royal Family. The Times has learnt from Saudi sources that he resigned because King Abdullah had not renewed his four-year service contract, which is the normal condition for all serving Saudi ministers and ambassadors.

The King’s unusual decision was seen as a diplomatic way of disguising what was, in effect, the Ambassador’s dismissal. But Prince Turki was warned that his term would not be renewed, and so took the initiative himself in deciding to return to Riyadh.

It is unclear whether the King had lost confidence in the country’s most senior ambassador, who is the brother of Prince Saud al-Faisal, the longserving Foreign Minister. But it is understood that Prince Turki did not feel comfortable with his working conditions in Washington.

“He was doing mainly public diplomacy touring the country and speaking to Americans,” one source said. “It was an extension of his work in London. He felt he had done enough.”

Prince Turki, son of the late King Faisal, was in charge of Saudi intelligence for 24 years but was removed only days before the attacks on September 11, 2001, when he came under attack in America for his previous links to Osama bin Laden. He was recalled for diplomatic service the following year and posted to London.

Although he has now retired from public service, sources said that he would like to take a more active role in Saudi Arabia as the country faces huge challenges.

By far the greatest looming crisis for the Saudis is Iran’s resurgent power in the Gulf and the rise of its Shia Muslim brethren.

At the weekend the Saudis signalled an abrupt reversal of policy towards nuclear technology. With fears that Iran is racing ahead with a programme that will lead to the building of an atomic bomb, the Saudis and their Arab Gulf allies announced that they would be exploring a “joint programme in the field of nuclear technology for peaceful purposes”.

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