Sir Peter Spencer wrote a strongly-worded letter to the European Air Defence and Space Company (EADS), the Franco-German aerospace giant and parent of Airbus, listing a series of demands, the newspaper said.

The FT reported that Spencer's leaked letter, dated June 10, called for the price of the programme to be cut by 120 million pounds to 230 million pounds and said EADS must agree by Thursday or the contract would face the axe.

"If there is failure to reach satisfactory agreement on these issues or any suggestion that you might be seeking to move away from the agreements I am seeking in this letter, I will have no hesitation in recommending the cancellation of the programme," he wrote.

"More immediately, if your response on June 24 falls short of the absolute unconditional agreement I seek, I shall recommend cancellation straight away," he said.

Spencer accused EADS of proposing an "unaffordable" contract that "falls short of our requirements", the FT said.

EADS won the breakthrough contract to supply a fleet of tankers to the RAF in January in the face of stiff competition from rival Boeing, who refuel more than 90 percent of the world's military aircraft, according to the FT.

EADS Chief executive Robin Southwell sought to play down the importance of Spencer's letter, suggesting to the FT that it was a normal part of negotiations.

"I'm not sure it is uniquely strongly worded," he told the newspaper.

Defence Secretary Geoff Hoon made it clear there were still issues to be resolved when the contract was awarded and talks continued, a Ministry of Defence spokesman said.

WAR.WIRE