Newcastle United's £24m shirt sponsorship deal with Wonga was engulfed in fresh controversy last night when the club's Muslim players were warned that wearing the new shirts would infringe Sharia law.

The intervention from the Muslim Council of Britain will heap further pressure on the club as it seeks to deflect widespread criticism after unveiling a four-year deal with the short-term loan company.

Of the Newcastle team who took the field against Manchester United on Sunday, four are practising Muslims – Demba Ba, Papiss Cissé, Cheick Tioté and Hatem Ben Arfa.

Wonga, whose deal to succeed Virgin Money begins next season, drew criticism from MPs for the level of interest charged on its 30-day loans. If a Newcastle supporter took out a loan to purchase a £49.99 club shirt, he would have to repay £71.92 after one month – a rate that would be equivalent to 4,212 per cent over a year.

The club did its best to offset criticism of the new deal by announcing that the Sports Direct Arena would revert to its original name of St James' Park. Wonga also promised to invest heavily in Newcastle's academy and the club's foundation scheme, which helps 15- and 16-year-olds find work.

However, the deal drew a stinging attack from Nick Forbes, the leader of Newcastle City Council, who said: "I'm appalled and sickened that they would sign a deal with a legal loan shark. It's a sad indictment of the profit-at-any-price culture at Newcastle United. We are fighting hard to tackle legal and illegal loan sharking and having a company like this right across the city on every football shirt that's sold undermines all our work."

Whilst it is accepted that Wonga have not behaved improperly it came in for further criticism from the Muslim Council of Britain. Under Sharia law, a Muslim is not allowed to benefit from lending money or receiving money from someone. This means that earning interest is not allowed. To comply, interest is not paid on Islamic savings or current accounts or applied to Islamic mortgages.

Shaykh Ibrahim Mogra, assistant secretary general of the MCB, said: "There are two aspects to this. We have the rulings of the religious law and we have the individual's choice and decision on how they want to follow or not follow that rule.

"The idea is to protect the vulnerable and the needy from exploitation by the rich and powerful. When they are lending and are charging large amounts of interest, it means the poor will have short-term benefit from the loan but long-term difficulty in paying it back because the rate of interest is not something they can keep up with. The Islamic system is based on a non-interest-based system of transaction."

Frédéric Kanouté, the former Spurs striker, refused to wear the 888.com logo of the gambling website when he was with Seville in La Liga because of his religious beliefs. He was allowed to play games for Seville with an unbranded shirt but had to wear the logo on his training equipment.

"Freddie was allowed to wear a top without the 888.com and that is a reasonable request to be made by the player," added Mogra. "Assuming all four are on the pitch at the same time, if you have seven out of 11 [who have the advertising on their shirts] you have sufficient coverage. It is not asking too much, I believe."

The Football Association entered the debate when its general secretary, Alex Horne, expressed his reservations about Newcastle's deal. "The Football Supporters' Federation of Britain told us in no uncertain terms it's not appropriate, [Sunderland non-executive vice-president] David Miliband has told us he does not think it is appropriate," Horne said.

"We are talking to the leagues on Friday about it. If you consider it as in the category of things that are inappropriate for children like gambling and alcohol, it feels like it is in that category to me."

While Blackpool and Hearts have already signed sponsorship deals with Wonga, the issue of insolvency appears more acute on Tyneside. "According to official figures, the North-east has the highest personal insolvency rate of anywhere in the country, at 35.2 per 10,000 adults," said the president of R3, the trade body for insolvency professionals, in response to Wonga's deal yesterday.

In the last financial year, to December 2011, Wonga more than tripled its income to £184m, and made £59m profit, from around 2.5 million payday loans. The £24m committed to Newcastle for 2013-17 will, however, launch the Wonga name to a much wider audience.

"We are building a club that can regularly compete for top honours at the highest level," said the Newcastle managing director, Derek Llambias. "As everyone knows, a strong commercial programme is vital to this goal and I am delighted to welcome Wonga into the fold as our lead commercial partner, alongside Puma and Sports Direct.

"Throughout our discussions, Wonga's desire to help us invest in our young playing talent, the local community and new fan initiatives really impressed us and stood them apart from other candidates."

Errol Damelin, founder and chief executive of Wonga, said: "We're really proud to be involved with Newcastle United. It is one of the biggest and most important clubs in the UK by any measure and has a fantastic following around the world.

"We're also really excited about investing in future stars both on and off the field. The Academy and the Enterprise Scheme gives us the opportunity to make a big difference."

A spokesman for Wonga said: "We listened over the last three days and we saw what really matters to the fans.

"Football is an emotional sport and it is obviously really important to them. We listened to what they wanted and that is why we did it."

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