In a strongly-worded report by the cross-party International Development Select Committee the Department of Trade and Industry is being accused of fuelling third world conflict by allowing British firms to sell arms to governments without regard to their human rights record.

MPs are also calling for the UK not to deploy 17-year-old soldiers in combat zones and say laws are needed to prevent business men bribing officials of foreign countries to win contracts.

The report uses terms like "scandalous and deplorable" to describe government policy.

The committee particularly condemned the Department for Trade and Industry for approving arms sales to Indonesia and Eritrea.

The sales went ahead despite objections from the Department for International Development and human rights groups.

Firms must ensure deals are struck without corruption, the committee says

The report adds: "Determined and principled control of arms exports is a litmus test of this government's concern to prevent conflict and inject an ethical dimension into foreign policy.

"It is clear that the DTI has yet to take on board effectively the human rights and conflict concerns which are at the heart of development policy."

The report calls for a register of arms brokers to better regulate the industry and to ensure that arms are not sold on, via third parties, to countries which the government would not grant export licences to.

Cleaning up business

Tax breaks should be withdrawn to businessmen who are proved to have bribed or corrupted foreign officials to win lucrative contracts overseas and the MPs are calling on ministers to introduce legislation making it a criminal offence to bribe overseas officials.

Firms must ensure deals are struck without corruption, the committee says

The cross-party committee demanded steps be taken ensure companies do not claim tax deductability on such illicit payments.

Although the Inland Revenue says bribes cannot be claimed as business expenses, the committee chairman, Tory MP Bowen Wells, said the current regulations could be evaded easily.

The committee has also called on "all businesses dealing with the developing world to have in place clear and regularly monitored anti-corruption standards."

Mr Wells said: "When an arms company is selling arms to a government, all sorts of goodies are put their way.

"In order to get contracts in many Third World countries, very often you have to pay something to the minister in charge of the contract.