Stuart Levey, the US Treasury under-secretary for terrorism and financial intelligence, said that Saudi Arabia had failed to prosecute the financiers of so-called terror groups.

Levey also claims that not a single individual identified by the United States or the UN as a terror financier had been prosecuted by Saudi Arabia.

He said: "If I could somehow snap my fingers and cut off the funding from one country, it would be Saudi Arabia."

Saud al-Faisal, the Saudi foreign minister, dismissed the criticism, saying Levey's public criticism was at odds with private praise from US officials.

'Religious concerns'

The US Commission on International Religious Freedom, asked Rice to close the Islamic Saudi Academy (ISA), in Northern Virginia, unless it could prove it was not teaching religious intolerance.

Members of the commission, appointed by Bush and congress leaders, had cited in a report "significant concerns" over teachings at the ISA, which it said could "adversely" affect US interests.

The commission also complained about Saudi Arabia's "exportation of extremist ideology and intolerance in education material" and wanted the school closed until the textbooks the school used were made available for "comprehensive public examination".