Saudi Arabia is funding mosques across Europe that have become hotbeds of Islamic extremism, the former British ambassador to Riyadh has said.

Sir William Patey’s remarks come a day after the government published a brief summary of a Home Office-commissioned report into the funding of extremism in the UK. The full report is being withheld for security reasons, amid much speculation that the government is refusing to disclose more in case it implicates Saudi Arabia as a key exporter of extremism.

“The Saudis [have] not quite appreciated the impact their funding of a certain brand of Islam is having in the countries in which they do it – it is not just Britain and Europe,” Sir William said, speaking at a round-table debate in Parliament. “That is a dialogue we need to have. They are not funding terrorism.

“They are funding something else, which may down the road lead to individuals being radicalised and becoming fodder for terrorism.”

Saudi Arabia is funding an ideology with consequences of which they might not be aware, according to Sir William.

“It is unhealthy and we need to do something about it.”

Sir William, 64, was British Ambassador to Saudi Arabia from 2006 to 2010 and has headed the Foreign Office Middle East desk.

Saudis “find it every easy to back off the idea that they are funding terrorism because they are not”, he said.

“What the World Association [sic] of Muslim Youth and the Muslim World League are doing is funding mosques and promoting an ideology – the Salafist Wahhabist ideology.”

The Conservative Middle East Council, which organised the debate, aims to “ensure that Conservative MPs and Peers understand the Middle East”.