The troubled American private ­security company Blackwater faced fresh ­controversy today when two former employees accused it of defrauding the US government for years, including ­billing for a Filipina prostitute on its payroll in Afghanistan.

According to Melan Davis, a former employee, Blackwater listed the woman for payment under the "morale welfare recreation" category.

The company, which allegedly employed her in Kabul, billed the ­government for her plane tickets and monthly salary, Davis said.

Blackwater, renamed Xe last year apparently because of the bad publicity attached to its original name, is among the biggest private security firms employed by the state department and Pentagon in Iraq and Afghanistan.

The most notorious incident involving Blackwater was the shooting of 17 Iraqis in Baghdad in 2007. Charges against Blackwater employees in the US over the incident were dropped last year, prompting the Iraqi government to order hundreds of its security staff out of the country within the next few days.

The latest accusations are contained in court records that have been recently unsealed and reveal details of a lawsuit by Davis and her husband, Brad, who both worked for Blackwater. According to Associated Press, the records say they had personal knowledge of the company falsifying invoices, double-billing federal agencies and charging the government for personal and inappropriate items whose real purpose was hidden.

They said they witnessed "systematic" fraud on the company's security contracts with the state department in Iraq and Afghanistan, and with the department of homeland security and federal emergency management agency in Louisiana after Hurricane Katrina.

There was no immediate response today from the company headquarters in North Carolina.

Melan Davis, who was fired from the company, is challenging the legality of her dismissal, claiming it was because she questioned the billing. Her husband voluntarily resigned from the company.

According to the lawsuit, Melan Davis raised concerns about the company's bookkeeping with her bosses in March 2006. The lawsuit claims she was told to "back off," and that she "would never win a medal for saving the government money".

The Davis couple launched the lawsuit in December 2008, one of a number against Blackwater.Brad Davis, a former Marine, served as a team leader and security guard, including in Iraq. He resigned from the company.

The Washington Post said the couple had made their allegations that Blackwater defrauded the government as part of a false claims lawsuit, which allows whistleblowers to win a portion of any public money that the government recovers as a result of the information.

The justice department has chosen not to join them in pursuing their civil suit, a decision that led to the court papers being unsealed this week.

The Post said that Melan Davis travelled to Amman, Jordan, where she and two co-workers spent hours generating reams of false invoices for plane travel at inflated rates.