The reported withdrawal was twice the amount stolen by looters

Saddam Hussein ordered his son to take about $1bn in cash from the Iraqi Central Bank just hours before the first bombs fell on Baghdad, the United States has said.

State department spokesman Richard Boucher confirmed the report on Tuesday following a New York Times article.

US officials say they have no idea where the money is now, but a spokesman for George W President Bush said it should come as no surprise that Iraq's leaders would try to take what he called their "ill-gotten loot" out of the country.

The New York Times said the removal of the funds would amount to one of the largest bank robberies in history - but added that since Saddam Hussein was nearly an absolute ruler, the action might not have broken any laws.

The reporter who broke the story told the BBC that Saddam Hussein might use the funds to stir up trouble against US forces in Iraq.

"There is concern among well-placed Iraqis who know about this theft that some of this money will be used to fund activities against the American forces here," Dexter Filkins said.

Lorry-loads

An Iraqi bank official told the newspaper that the volume of the cash was so great it had to be taken away in three lorries at about 0400 local time on 18 March.

He said the banknotes amounted to one-quarter of the Central Bank's foreign currency reserves.

It is not known if the money was the personal assets of Saddam Hussein, but the paper says the withdrawal was more than double the amount estimated to have been looted as the regime crumbled.

A US treasury official, George Mullinax, told the Times that the money had been taken by "Saddam Hussein's people".

Troops have found millions in US dollars stashed in Baghdad

As well as Saddam Hussein's younger son Qusay, other officials supervising the two-hour withdrawal from the bank vault included the then Finance Minister, Hikmat Ibrahim al-Azzawi, the report said.

He has since been taken into custody by the US-led forces whose invasion toppled Saddam Hussein's rule.

The Times quoted a US special forces officer, Colonel Ted Seel, as saying that he too was aware of the seizure of the money.

He told the newspaper that intelligence information suggested that a convoy of lorries crossed from Iraq into Syria some time after the pre-dawn bank withdrawal.

But it is not known whether the cargo was the cash or something else.

Insurgency funds

Some observers say some of the money may have been sent outside Iraq, perhaps for use by Saddam Hussein's relatives who are believed to have fled.

But they say it would also make sense for regime leaders to hide funds inside Iraq to pay for a campaign of insurgency against the coalition occupation and even pave the way for their return to power.

US forces found $650m in one of Uday's palaces

Mr Mullinax told the Times that some of the $650m in US$100 bills found by coalition patrols last month could be from the Central Bank.

But the possibility that some of the cash may have gone to Syria could refocus attention on Damascus' relations with the former regime.

During the war, the US accused Syria of giving help to Saddam Hussein and threatened reprisals.

Washington officials also said they believed that a number of regime officials had sought refuge in Damascus.

US Secretary of State Colin Powell visited Syria for talks at the weekend but it remains unclear how much progress he made.

The BBC's Middle East analyst, Roger Hardy, says: "The Americans think they have succeeded in getting their message across about not sheltering fugitive members of the Saddam regime.

"It's less clear if they have actually handed anybody over."