Severin Carrell – Tony Blair is to resume the sale of Hawk jets and other arms to Indonesia by lifting a Europe-wide embargo imposed during the East Timor crisis. Whitehall sources say the Prime Minister and Robin Cook, the Foreign Secretary, are expected to vote to allow renewed arms sales to Indonesia at a Council of Ministers meeting in Brussels next week.

But the likely resumption of arms sales has infuriated the Liberal Democrats and the Campaign Against the Arms Trade. They claim British-made Saladin armoured vehicles were used by Indonesian forces during violence over Christmas in the Maluku Islands.

Anne Feltham, of the Campaign Against the Arms Trade, accused the Government of sending a "dangerous" signal to Indonesia that Britain tolerated the abuse of human rights.

Jenny Tonge, the Liberal Democrats foreign affairs spokeswoman, said: "The Government should extend the embargo. Looking at what happened in East Timor, it would be very unwise to lift the embargo until things are more stable."

The row will increase pressure on the Government after a leaked memo disclosed yesterday that the Foreign Office and the Department for International Development are in a dispute with the Department of Trade and Industry and the Ministry of Defence over resuming sales to Pakistan.

Clare Short, the Overseas Development Secretary, and Mr Cook are resisting attempts to agree to new arms export licences to Pakistan, now under the control of the military ruler, General Pervez Musharraf.

Charles Kennedy, the Liberal Democrat leader, claimed ministers had replaced their ethical foreign policy with a "commercial policy with a foreign dimension".

But the Foreign Office and MoD hope that Sir Charles Guthrie, Chief of the Defence Staff, will help defuse the rowduring talks in Pakistan today.