Antony Barnett – The Observer Tomorrow is make-or-break day in one of South-East Asia's bloodiest conflicts. Last week more than 2,000 Indonesian government troops sailed from the Javanese port of Surabaya to reinforce a 26,000-strong force already in the province of Aceh, where a 26-year struggle for independence has already led to the deaths of more than 10,000 people.

Monday is the deadline laid down by the government for rebels from the Free Aceh Movement (Gam) either to resume peace talks or face an "all-out" military attack. The full force of that battle will resonate in Britain, where much of the weaponry about to be trained on the rebels was made. Among the equipment being deployed to Aceh are Scorpion tanks made by Coventry-based Alvis, which were rubber-stamped for export by a newly elected Labour government just as it was promising to pursue an ethical foreign policy.

On Wednesday, Indonesia's military chief General Sudarto said: "We won't do it half-heartedly. We will fight them all out. The TNI [Indonesian military] will provide the last resort in settling the Aceh question. We already know what tactics to apply in dealing with the Gam rebels, who are known often to lose themselves among the civilian population."

The spectre of British-made tanks involved in the conflict is acutely embarrassing for the Blair government, which came under pressure to block the sale. In December 1996, the Conservative Trade Secretary Ian Lang announced he had granted an export licence for 50 Scorpions, all fitted with 90mm guns and two machine guns. But the deal – like the controversial sale of Hawk jets – was not complete when Labour won the 1997 election. Human rights groups pleaded with then Foreign Secretary Robin Cook to revoke the licences. Cook, who had promised that Labour would introduce an ethical foreign policy insisted that the export was permissible because the tanks would not be used for internal repression.

Yet despite warnings from Indonesian human rights groups that similar vehicles had already been used to suppress dissent, Cook approved the export. In April 1996 it was reported that Scorpions had been used on a campus at the Islamic University of Indonesia at Ujung Padan, South Sulawesi, against students protesting at bus fare increases. Three were killed and many more injured. Since then there have been reports that the tanks were used in 1998 to suppress demonstrations in Jakarta, during which 18 students were killed in two separate incidents.

The deployment of British weapons to Aceh has outraged human rights and anti-arms trade campaigners. This week, the Indonesian Human Rights Campaign (Tapol) and the Campaign Against the Arms Trade wrote to Foreign Office Minister Mike O'Brien urging him to intervene. Tapol's Carmel Budiardjo said: "The Indonesian military's decision to use British-made Scorpions in operations in Aceh will implicate the UK in a conflict that contradicts this country's oft-repeated support for the peace process. Labour Ministers have only themselves to blame for allowing the export of these tanks to go ahead in the first place. They were warned that Scorpions would be used for internal repression, but chose to ignore these warnings. They had better move fast to get these tanks withdrawn."

Labour MP Jeremy Corbyn, a long-term critic of arms sales to Indonesia, warned: "There is simply no excuse for Ministers who were warned that British weapons would be used." The sentiments were echoed by Richard Bingley, of the Campaign Against Arms Trade. He said: "Yet again, clear national rules have been systematically broken. It won't be Ministers in Whitehall who pay the price, but people on the ground fac ing invasion from one of the world's most notorious armed forces."

A Foreign Office spokes-man said the situation was being monitored: "If British tanks are used, then this will breach the conditions of the export and we will make our position known to the Indonesian authorities."

The disclosure that British tanks were being deployed in Aceh came after a report from the Indonesian News Agency on an inspection of troops heading to the province. It reported that 12 Scorpions were among the equipment being used by 6,350 elite troops from navy, army and air force units that were expected to arrive in Aceh on Tuesday, a day after the expiry of the deadline for the rebels to resume peace talks. Indonesia has 26,000 troops stationed in Aceh at present.

In December, there was hope of a breakthrough when GAM and the government agreed a peace deal, under which the rebels were supposed to place their weapons in special arms dumps and the Indonesian military was meant to withdraw to defensive positions. Yet neither Jakarta nor GAM has so far fulfilled its side of the bargain, and both sides continue to blame each other. Since then, thousands of villagers have fled their homes and sought refuge in local mosques and schools. Indonesia's Foreign Minister, Hassan Wirayuda, defended a possible crackdown: "What we are doing or will do in Aceh is much less than the American power that was deployed in Iraq. We aren't violating anyone's sovereignty."