The United States government has said Islamic charities sponsored by Saudi Arabian government have been channeling funds worth millions of dollars to the Al Qaeda terror network and the militant outfit Hamas through an investment firm.

This is the first time the US government has admitted the links of the Saudi Arabian government to terror outfits.

According to court documents made public on Tuesday, the charities in northern Virginia invested $3.7 million in BMI Inc, a now-defunct, New Jersey-based private Islamic investment company, which is suspected of funding Al Qaeda and the Islamic Resistance Movement (Hamas).

The Bureau of Immigration and Customs Enforcement filed the affidavit in Virginia federal court.

The money, part of a $10 million endowment from unidentified donors in Saudi Arabia, may have been transferred to terrorist groups, The Washington Post reported on Wednesday.

The investigation into such suspect companies spans four continents and is the largest current US probe into terrorist financing, US officials told the daily.

The affidavit filed by David Kane was to explain the detention of BMI Inc founder Soliman S Biheiri, indicted two weeks ago on charges of making false statements to obtain US residency and other immigration charges.

Biheiri, who started BMI Inc in 1986 was held for more than a month as a material witness in the Justice Department's investigation of terrorist financing, the report said, quoting unidentified sources.

One of BMI's chief investors was Saudi businessman Yasin Qadi, whom the United States and United Nations named a 'specially designated global terrorist' in October 2001 for his alleged support for both Al Qaeda and the Hamas.