THERESA MAY was branded a hypocrite  yesterday for calling on world leaders at the G20 summit in Germany to cut off funding streams for terrorists which are being channelled through financial institutions.

The Prime Minister warned that extremist group Isis is using loopholes to build up funding and called for the banking system to take aggressive action to shut them down.

But Labour leader Jeremy Corbyn — who has made repeated calls for terror funding to be cut off — challenged her to get serious about terrorism by ending her cosy relationship with Saudi Arabia and other despotic Gulf states.

Saudi Arabia has spent billions on British arms and is also the world’s biggest supporter, financial backer and exporter of extremist ideology.

Mr Corbyn said: “She should publish the suppressed report on foreign funding of UK-based extremism and have difficult conversations with Saudi Arabia, not hug Saudi and allied Gulf states even closer.”

Ms May is yet to release a report, commissioned by former PM David Cameron, which looked at revenue streams for extremist groups that was due to be published last spring.

Green Party co-leader Caroline Lucas questioned whether the “astonishing” delay in revealing the report, likely to be heavily critical of Britain’s relationship with Saudi Arabia, is connected to maintaining diplomatic ties.

In a speech at the G20 talks in Hamburg, Ms May said information about the movement of foreign fighters leaving Syria and Iraq should be shared internationally so that they could be tracked.

She also told leaders that measures must be taken “against permissive environments for terrorist financing.”

The Tories’ own record however, when Ms May was home secretary, saw British-based suspected terrorists cultivated by MI5 and allowed to travel to and from destabilised countries in North Africa and the Middle East for war.

They were encouraged by British government agencies to join forces that were battling to topple Libyan leader Muammar Gadaffi and to join al-Qaida-affiliated groups in Syria.

Manchester bomber Salman Abedi travelled to Libya, as did members of the Libyan Islamic Fighting Group (LIFG), proscribed as a terrorist organisation in Britain despite previously being funded by MI6, which is part of an “al-Qaida-inspired” movement aiming to create a “hardline Islamic state” in Libya.

British members of the group — known as the “Manchester boys” — were deemed high risk by the government and were subject to control orders as recently as 2011.

When signs emerged of an uprising against Gadaffi however the control orders were lifted, many had their passports returned and some were allowed to board flights to the Libyan capital Tripoli.

Mr Abedi is reported to have been placed on a terrorist watch list by the FBI last year. MI5 were allegedly warned that he and his group were looking for a “political target” in Britain.

He was allowed to re-enter Britain before he carried out the Manchester Arena nail-bombing which killed 22 concert-goers, many of whom were young girls.

Britain has licensed £3.3 billion in arms to Saudi Arabia since it began bombing Yemen in 2015, during which at least 10,000 people were killed. Around 80 per cent of the remaining population is reported to be starving.

Campaign Against Arms Trade has taken the decision to sell Saudi Arabia weapons to the High Court. A judicial review decision is expected on Monday.