BAE Systems paid more than £100m a year to Saudi Arabia's former ambassador to Washington over more than a decade in connection with Britain's biggest ever defence contract, according to British media reports last night.

The reports, from the BBC Panorama programme and the Guardian website, say that the sums were paid to Prince Bandar bin Sultan. Prince Bandar, who is now a national security adviser to King Abdullah of Saudi Arabia, is the son of the Saudi defence minister, Prince Sultan.

Sums equivalent to £30m a quarter were allegedly paid - with the knowledge of the Ministry of Defence - into Saudi accounts at Riggs Bank in Washington to which Prince Bandar had access, the Guardian reported.

The BBC reported the funds were used to finance flights for Prince Bandar's own jet.

BAE has consistently denied allegations that there was anything illegal in payments it made in association with the £43bn Al Yamamah contract under which it supplied Tornado warplanes, Hawk training aircraft and other defence equipment to Saudi Arabia. BAE acted in accordance with relevant contracts, with Saudi government approval and where appropriate that of the UK, a spokesman said.

A corruption investigation by the Serious Fraud Office was halted in December after the attorney-general, Lord Goldsmith, reviewed the case. The head of the SFO, Robert Wardle, halted the case because of what he said had been representations that continuing the investigations would have jeopardised Britain's national security.

Officials had said that pressure from the Saudi government, including from Prince Bandar, had been a key factor in the decision, which was backed by Tony Blair.

Prince Bandar did not respond to requests for comment, the Guardian reported.

Tony Blair faced opposition calls last night for a full parliamentary enquiry into the allegations against BAE Systems.

The Liberal Democrats said the allegations were "shocking".

"If it is indeed true that the British government has been complicit in enormous under-the-counter payments to Prince Bandar, there must be a full investigation by parliament," said Vincent Cable, the Liberal Democrat deputy leader.

Mr Cable demanded that the Commons public accounts committee be reconvened to look into the Al Yamamah investigation.

"I have been able to obtain through parliamentary questions supporting evidence which helps to underpin the Guardian's story," added Mr Cable.

With acknowledgement to Stephen Fidler, Christopher Adams and Financial Times.