David Cameron vowed to hand hundreds of millions of pounds of taxpayers’ money plus vital military secrets to Pakistan yesterday to make amends for offending the Muslim nation last year.

The Prime Minister pledged to invest £650million in Pakistani schools at a time when the education budget at home is being cut.

Britain is also to give highly sensitive military technology to combat roadside bombs to the Pakistani security services, which are widely blamed for funding and arming the Taliban.

In a huge gamble with the lives of British troops in Afghanistan, Mr Cameron agreed to spend millions more on a centre of excellence for the country’s soldiers and spies near Peshawar, a hotbed of militancy.

The gesture came after Mr Cameron sparked a diplomatic rift last year when he accused the country of ‘looking both ways’ on terrorism.

The technology deal sparked fears that the Pakistani intelligence service, the ISI, would hand details to the Taliban, enabling them to build more effective improvised explosive devices (IEDs).

The huge cash injection for schools by the Department for International Development will make Pakistan the UK’s biggest recipient of overseas aid.

It is designed to get four million children into the classroom–17million currently get no schooling. Pakistan spends just 1.5 per cent of its national income on schools but is placing billion-pound orders for six Chinese submarines and 36 fighter aircraft.

The UK will have no control of the curriculum in schools receiving funding, meaning taxpayers could see their money pumped into madrassas peddling extremism.

Mr Cameron defended the payments, saying it was ‘in our interest’ to help Pakistan.

He said: ‘If Pakistan is a success we’ll have a good friend to trade and invest and deal with.

‘If we fail we’ll have all the problems of migration, of extremism, problems that we don’t want to see. So it’s in our interest that Pakistan succeeds.’

Pakistan’s Prime Minister Yusuf Raza Gilani said he believed a ‘root cause’ of terrorism was illiteracy.

But Tory MP Philip Davies said: ‘Particularly at the moment when we’ve got no money, there’s absolutely no justification for increasing the amounts that we give to other countries.

‘That is especially the case with countries that can afford to spend billions on defence. If they can afford submarines they can afford to educate their own people.

‘We need to concern ourselves with our own schools because countries around the world are overtaking us in educational attainment.’

In a speech to university students, Mr Cameron vowed to get over the ‘tensions’ sparked by his comments last year and create a ‘new start’ in relations with Pakistan.

But he also said Pakistan had to raise taxes and stamp out corruption to justify British generosity. ‘Understandably, the British people want to know every penny we spend is going to the right places.

‘I need to convince them that it is. But my job is made more difficult when people in Britain look at Pakistan, a country that receives millions of pounds of our aid money, and see weaknesses in terms of government capacity and waste.’

Mr Cameron, who was accompanied on his one-day visit by Tory party chairman Baroness Warsi, who is of Pakistani origin, ducked questions about whether he could guarantee that the ISI will not hand the anti-IED technology to the Taliban.

The £650million investment for Pakistan schools will come out of the existing aid budget.

The reputation of Britain’s international aid programme is at risk because of lax controls to prevent fraud and corruption, the National Audit Office warned last night.

It said the Department for International Development was doing too little to prevent taxpayers’ money being siphoned off by corrupt officials in deprived countries.

International Development Secretary Andrew Mitchell insisted that weaknesses in the systems set up by Labour had been addressed.