Deliveries will be halted until the end of March 2020 and no new defence contracts approved to Saudi Arabia and other countries involved in the Yemen war, a government spokesman said.

Calls have grown from within Chancellor Angela Merkel's party for the ban to be lifted after the drone strikes on Saudi oil installations, but the German leader on Tuesday said she saw "no need" for her government to reverse the policy at this point.

Berlin has also faced protests by France and other EU partners because the ban has impacted joint defence projects such as the Eurofighter and Tornado jets, but earned praise from rights groups.

Germany is among the world's top arms exporters, a group led by the United States that also includes Russia, China, France and Britain.

Merkel's coalition government in October 2018 imposed a first six-month arms embargo on Saudi Arabia, amid shock over Khashoggi's murder.

The 59-year-old Saudi palace insider turned regime critic was strangled and his body cut into pieces by a 15-strong Saudi hit squad inside the kingdom's consulate in Istanbul, Turkish officials say.

Saudi Arabia under de facto ruler Crown Prince Mohammed bin Salman launched military operations in impoverished Yemen in 2015 to help the government there push back against Iran-aligned Huthi rebels.

Yemen's conflict has killed tens of thousands of people, mostly civilians, and triggered what the UN describes as the world's worst humanitarian crisis.

Yemen's Huthi rebels claimed responsibility for the major drone and missile attack last Saturday on key Saudi oil installations.

However, US officials have cast doubt on that claim, and Saudi Arabia said it would soon unveil evidence linking regional foe Iran to the attacks.