It really is a large amount of money and it is competing with priority programmes such as education and health

World Bank

It claims the BAE Systems equipment is more expensive than necessary and the cash would be better spent on health and education.

Friday's Guardian newspaper claims the bank could still block the deal - even though the company is shortly expected to begin exporting parts of the Watchman radar system, after being granted an export licence on Thursday.

Prime Minister Tony Blair has said tackling poverty in Africa is one of the top priorities for his second term.

Saving jobs

A World Bank spokesman told the BBC: "We are concerned that such a large expenditure is going to purposes whose justification is not clear to us.

Tanzania

Population : 32.9 million Surface area (1997): 945.1 thousand sq. km Population per sq. km (1997): 35.4 Population growth : 2.4 % Life expectancy (1998): 47 years GNP per capita : $240 GDP : $8.8bn

"To put it in context, $40m (�28m) is about one third of basic national education expenditure in Tanzania.

"So it really is a large amount of money and it is competing with priority programmes such as education and health."

The deal, which reportedly safeguards 250 jobs on the Isle of Wight, has reportedly been the centre of a bitter cabinet row.

Diverting funds

Mr Blair has been criticised by aid agencies for his support for the deal, which, it is claimed, flies in the face of his commitment to tackling poverty in Africa.

The Guardian newspaper reports that International Development Secretary Clare Short and Chancellor Gordon Brown, are still hoping to block the deal.

The Chancellor has been instrumental in securing debt relief for Tanzania and has spoken out on the danger of diverting funds from health and education into defence projects.

The Guardian claims that Tanzania can not go ahead with the deal without World Bank approval, although this has yet to be confirmed by bank officials.

Previously, the World Bank has said it supports the upgrading of Tanzania's air traffic control system but estimates that a suitable civil system should only cost �7m.

In a report published earlier this year, it said the BAE system is "too expensive and not adequate for civil aviation."

Price cut

Meanwhile, the Financial Times reports that ministers had put pressure on BAE to cut the price tag of the contract.

The Tanzanian Air Defence Command has only 19 combat aircraft in various states of repair and four unarmed helicopters.

The Tanzanian Government argue that it needs this kind of system to boost the safety of Tanzanian airports.

A Tanzanian army officer told Reuters news agency that the country did not intend to use the radar for military purposes, saying "we have our own plans."