An ex-home secretary has raised fears that a British suicide bomber handed up to £1m of taxpayers’ money paid to him in compensation to Isis.

David Blunkett said the Government needed to be clear over whether restrictions on the money given to Jamal al-Harith had been robust enough to stop it getting into the hands of the extremist group which he eventually joined.

The former Labour cabinet minister also repeated concerns over whether surveillance on Harith had been weakened in 2014 by then-Home Secretary Theresa May allowing him to flee to Syria, where Isis is waging a bloody war.

Ms May’s spokesman has refused to answer questions on how Harith managed to slip through the net, or on whether Ms May approved of the compensation given to him in 2010, at the start of her tenure in the Home office.

Mr Blunkett said: “We need to examine whether the money laundering requirements in these cases have been robust enough, not because we know that any of this money has been transferred out of the country, but because we need to reassure people.

He added: “We need a logical and rational response and I hope that the Government will give that, because they haven’t over the last 24 hours.”

Harith, 50 when he died, is said to have received £1m while Ms May was Home Secretary, from the Government in compensation for his detention at Guantanamo Bay.

Isis has claimed the bomber, born Ronald Fiddler in Manchester, blew himself up in an explosives-laden vehicle in a village south of Mosul.

Islamic State video purports to show fighting in Mosul

The terror group said there had been many casualties, though this has not been officially confirmed, and released a picture of a grinning Harith, who also went by the name Abu Zakariya al-Britani.

Former Prime Minister Tony Blair yesterday took the unusual step of issuing a statement denying his administration had paid compensation to Harith, a claim made by a national newspaper, and pointing out that the money was handed over in 2010 under a Conservative government.

With focus shifting on to Ms May’s tenure at the Home Office, her spokesman refused to answer questions on the matter at two separate briefings.

No 10 declined to comment on the compensation payments, whether they were necessary, if Ms May had agreed with them or tried to stop them. The spokesman also refused to say why the Prime Minister as Home Secretary had allowed Harith to travel to Syria.