The government has been put on notice that it is in breach of international law for allowing the export of British-made missiles and military equipment to Saudi Arabia that might have been used to kill civilians.

The hugely embarrassing accusation comes after human rights groups, the European parliament and the UN all expressed concerns about Saudi-led coalition attacks in Yemen. Lawyers acting for the Campaign Against the Arms Trade (CAAT) have stepped up legal proceedings against the Department for Business, Innovation and Skills, which approves export licences, accusing it of failing in its legal duty to take steps to prevent and suppress violations of international humanitarian law.

In a 19-page legal letter seen by the Observer, CAAT warns that the government’s refusal to suspend current licences to Saudi Arabia, and its decision “to continue the granting of new licences” for military equipment that may be destined for use in Yemen, is unlawful. The letter cites article two of the EU Council Common Position on arms sales, which would compel the UK to deny an export licence if there was “a clear risk” that equipment might be used in a violation of international humanitarian law.

Lawyers for CAAT have given the government 14 days to suspend licences allowing the export of military equipment to Saudi Arabia, pending the outcome of a review of its obligations under EU law and its own licensing criteria. A failure to comply would see proceedings against the government, which would force it to explain in the high court what steps it has taken to ensure that UK military hardware is not being used in breach of international law.

“UK weapons have been central to a bombing campaign that has killed thousands of people, destroyed vital infrastructure and inflamed tensions in the region,” said Andrew Smith of CAAT. “The UK has been complicit in the destruction by continuing to support airstrikes and provide arms, despite strong and increasing evidence that war crimes are being committed.”

The legal move places the UK’s relationship with Saudi Arabia in the spotlight at a sensitive time. Almost £6bn of UK arms have been licensed to Saudi Arabia since David Cameron took office. However, concerns about the country’s human rights record have led to calls for the UK to stop arming the Saudis. Last weekend, Saudi authorities staged a mass execution of 47 prisoners; at least four were convicted for their involvement in political protests. In the wake of the executions, Belgium announced it would ban arms sales to Saudi Arabia. Germany’s Greens have demanded their country do the same.

When pressed in the past the UK has refused to suspend the arms exports, claiming that they comply with all legal frameworks. A Foreign Office minister, Tobias Ellwood, told parliament last July: “We have not seen any credible evidence that suggests that the [Saudi-led] coalition has breached the law.”

However, Amnesty International has warned of “a pattern of appalling disregard for civilian lives displayed by the Saudi Arabia-led military coalition”. The UN has expressed similar concerns. Last year Saudi-led coalition strikes hit a Médecins Sans Frontières mobile clinic and hospital and several schools. Saudi coalition strikes are alleged to have targeted electricity and water plants.

A spokeswoman for the Department for Business confirmed that it had received the letter, filed by law firm Leigh Day, but could not comment because of “ongoing legal action”.

Last week Leigh Day defended itself against accusations that lawsuits it had brought against the government on behalf of Iraqis who claimed that they had been abused by British forces were a form of “ambulance chasing”.