The assault on the US on September 11 cost as much as $2m, according to western intelligence, some of which may have come indirectly from wealthy benefactors in the Arab oil states of the Gulf.

Suspicion has fallen on Islamic charities in Kuwait, Saudi Arabia, the United Arab Emirates and Qatar, which people familiar with the region estimate may have provided millions of dollars a month to funds linked to Osama bin Laden's Al-Qaeda movement.

Intelligence officials in the US declined to give a breakdown of their $2m estimate and said there was as yet no direct link to funding. "It's not clear what the financial structure is. The investigation into a massive financial set-up never proved very successful," said one.

What is known, however, is that a charitable network used in the 1980s to channel funds to anti-Soviet forces in Afghanistan is still partly intact. For the past decade, money has been flowing to Islamist movements active in states as far afield as Algeria and the Philippines. Funds ostensibly destined for humanitarian work in Bosnia and Chechnya may in fact end up under Mr bin Laden's control.

The vast majority of Islamic charities exist to do good works among the poor and destitute - mosques throughout the Islamic world have clinics attached to them.

The funding channel is part of what one American expert has described as the "privatisation of terrorism" after an earlier era in which radical guerrilla movements were invariably state-funded.

A Saudi political dissident not aligned to Mr bin Laden said the US focus on him as public enemy number one since the bombings of its embassies in east Africa in 1998 had helped to raise his profile.

"This was very effective public relations for bin Laden in the Muslim world," said the Saudi. "People started thinking about how they could support him. The young and mobile volunteered to go to Afghanistan, while a few rich people in the Gulf were able to mobilise money. They channel their money through him because they trust him."

Transfers are made either through the Islamic banking system, through offshore accounts or by using the unofficial money exchange system prevalent in the region and known generically by the Hindi name of hawala.

Some of the biggest family-based money-dealers are based in London, providing a speedy, reliable and trustworthy method for immigrants to remit money home. Cash delivered in one place can be made available elsewhere in the time it takes to make a telephone call or send a fax.

"It beats Western Union," said one Gulf source. "You don't need to present any identification, the commissions are lower and it's quicker."

Money-laundering experts, however, believe the system may be used by criminal gangs, such as drug traffickers, and by terrorist groups to move funds rapidly around the world without fear of detection. They believe some funds are shipped directly in cash, principally from Dubai, the freewheeling, entrepreneurial Gulf emirate that operates a thriving gold and money market and has a tradition of trade with Iran.

An Iranian familiar with the traffic claimed that, at least up until six months ago, two flights a week were travelling from Dubai to Kandahar, Mr bin Laden's Afghan base, with boxes of dollar bills.

For some benefactors, the funding is said to be a way of helping to propagate the puritan Wahhabi school of Sunni Islam that is dominant in Saudi Arabia.

Other benefactors may see their donations as an insurance policy in the event of Islamists coming to power in the future. US intelligence agencies were quoted in 1999 as saying some funds were paid by Saudi businessmen as protection to Mr bin Laden to stave off attacks on their businesses.

Saudi sources say some measures have been taken to prevent charity funds reaching suspect Islamic foundations after concerns were expressed by western and Arab states. As early as 1993, President Hosni Mubarak of Egypt travelled to Riyadh to protest about Mr bin Laden's financial support for Islamic insurgents in Egypt. In the same year, Charles Pasqua, the then French interior minister, also visited the Saudi capital to complain about the alleged funding by a number of Saudi businessmen of insurgents in Algeria.

Ironically, the traffic of funds from the Gulf was spurred by the Central Intelligence Agency in the 1980s as part of its strategy of arming Afghan insurgents fighting the Soviet occupation. Among the CIA's partners in this endeavour were Mr bin Laden and BCCI, which became paymaster of the anti-Soviet jihad before crashing in 1991 amid the biggest fraud in history.

The Afghan-Soviet war was fought with a combination of US funds, matched dollar for dollar by the Saudis and supplemented by private benefactors such as Mr bin Laden.

With the withdrawal of Soviet troops, the official funding wound down and the donations of the private benefactors were switched to other Islamic causes.

According to John Cooley, an American author: "The creeping privatisation of the jihad, for this is in fact what it was - not rogue governments but rogue private financiers are responsible for much of the post-war political terrorism in the west - grew out of the Saudi-American alliance."

Additional reporting by Michael Peel