An inquiry should examine Tony Blair's role in the scrapping of an investigation into a major arms deal, Lib Dem leader Nick Clegg has urged.
Critics said the probe threatened a Typhoon deal with the Saudis
The then-PM had said the decision to stop the probe into the BAE deal with Saudi Arabia was taken due to national security, not commercial, concerns.
But in a letter released during a legal case, Mr Blair refers to "concern" over ongoing business negotiations.
Mr Clegg said the revelation confirmed his "very worst fears" about the case.
Downing Street has refused to comment on the letter to Mr Blair's attorney general.
The letter from Mr Blair to Lord Goldsmith dated 8 December 2006 was released to the High Court during a case brought by two pressure groups who are challenging the legality of the decision to end investigations into BAE Systems' dealings with Saudi Arabia.
It refers to "critical difficulties" that might have affected the major contract for new Typhoon military aircraft.
There was uproar when the Serious Fraud Office inquiry into the Al Yamamah contract from the 1980s was dropped, but Mr Blair insisted the decision was taken on security grounds.
Mr Clegg called for an independent inquiry into Mr Blair's role and insisted that a National Audit Office report on the deal, which has never been made public, should be released.
He said: "Tony Blair must urgently explain what he thought he was up to by invoking the Typhoon contract as a reason to stop the SFO investigation.
"As his own attorney general, Lord Goldsmith, made clear to him between December 2005 and December 2006, commercial relations are an improper basis under international law to suspend a legal investigation.
"Knowing this, why did Tony Blair persist in pursuing a legally improper line of argument which could amount to an attempt to pervert the course of justice?"
BAE, the UK's largest defence group, and the Saudis have always said they acted lawfully.
Six days after the letter was written, Lord Goldsmith announced to the House of Lords that the probe into allegations of kickbacks to Saudi princes was being suspended.
He said diplomatic cooperation between Britain and Saudi Arabia was being put at risk by the investigation, with implications for UK security.
Recent reports have suggested that Saudi Arabia had threatened to pull out of a potential new order for Typhoons.
In the letter to Lord Goldsmith, Mr Blair acknowledged that his intervention in such a case was unusual but said he would be failing in his duty if he did not point out the security issues at stake.
He went on to say: "While this letter is not primarily concerned with the serious damage being done to our bilateral relationship by the investigation, it is of course of concern to me, not least because of the critical difficulties present to the negotiations over the Typhoon contract."
In September, the Ministry of Defence announced a £4.43bn deal to sell 72 Typhoon aircraft to Saudi Arabia.
The contract safeguarded thousands of jobs in the north-west of England, where the planes will be partly built by BAE Systems.