Ministers published their second annual report on arms exports amid claims by critics that Labour's "ethical" foreign policy was in tatters.

The report revealed that the government issued more than 10,000 individual arms licenses in 1998, including many to controversial countries such as Indonesia and Saudi Arabia.

The number of "open licences" which allow multi-shipments of arms without further reference to the government was up from 156 in 1997 to 566.

The publication of the figures coincided with a picket by Campaign Against The Arms Trade (CAAT) outside the Copex arms fair at Sandown Park racecourse in Surrey.

Foreign Secretary Robin Cook: Suspended arms sales to Indonesia

In the wake of the East Timor crisis much attention has focused on the report's disclosure that the number of licenses to Indonesia rose last year from 41 to 49 last year.

MPs expressed outrage in September when it was revealed that £130m of taxpayers' money had been used over the past year to assist the Indonesian government to continue with the purchase of British-built Hawk jets.

The government eventually suspended arms exports to Indonesia after pro-Jakarta militias went on the rampage in East Timor following the independence referendum there.

'Public outraged over Indonesia'

Rachel Harford of CAAT said: "The public were outraged and shocked in the role the UK had in being a major supplier of arms to countries like Indonesia.

"The fact that the government finally brought in an embargo given the atrocities in East Timor just recently shows that the public has become very concerned about where we are selling arms too."

However, Foreign Office Minister Peter Hain insisted the government had acted ethically and openly in its arms sales policy.

Peter Hain: No arms sold for repression or aggression

"We are being more accountable, more transparent, more open than any government in the world and certainly more than any other Tory government of the past."

He added: "We have banned land mines. We have banned torture equipment. We do not supply arms anywhere in the world for internal repression or external aggression."

On Indonesia, Mr Hain said: "The fact is that we have not sold arms under the Labour government to Indonesia which could be used for internal repression or external aggression."

He added: "Under the last full year of the Tory government they sold £443m worth of arms to Indonesia. Under the first full year of the Labour government that was £2m."

Culture of secrecy

But Liberal Democrat defence spokesman Menzies Campbell called for the Queen's Speech to contain a Strategic Arms Export Bill to tighten controls still further.

He said this should include measures to tighten controls on who gets weapons, controls on licensed production in third countries and the creation of a Commons select committee to monitor individual applications.

Oxfam said the report showed the UK was still selling arms and ammunition to countries with serious human rights abuses or conflicts such as Kenya, Sri Lanka and Zimbabwe.

The charity's policy director Justin Forsyth said: "This report does nothing to contradict an impression that arms sales to countries that are at war or implicated in human rights abuses are possible because of a loose interpretation of the 1988 European Union Code of Conduct on arms transfers."

'Blatant hypocrisy'

Shadow Defence Secretary Iain Duncan Smith accused the government of hypocrisy over its approach to arms sales. "While Conservatives welcome the news of a strong defence industry, Labour face the continued embarrassment of their blatant hypocrisy on arms sales," said Mr Duncan Smith.