The Government will today withhold a £50 million contribution to the World Bank in protest at the conditions it attaches to aid for developing countries.
The decision reflects concern that the world's richest nations should not be telling poor countries how to run their economic affairs.
International Development Secretary Hilary Benn said that conditions should be attached in areas such as tackling corruption and good governance.
However, it was "not right" to impose them on economic policy choices like privatisation and trade liberalisation.
"Last year the World Bank adopted a new set of principles which said that these conditions should reflect the priorities that countries set for themselves in economic policy," he told BBC Radio 4's Today programme.
Mr Benn said the £50 million was dependent on evidence of the Bank changing the way it used conditionality in relation to economic policy.
He continued: "Giving a greater voice in taking decisions about how they are going to fight poverty to developing countries when it comes to economic policy is, I think, the right approach and I hope the Bank is going to support that line and we see the evidence that in fact things are changing."
Mr Benn will expand on his argument in a speech to civil society organisation Transparency International later.
Danny Leipziger, Vice-President of the World Bank, which is holding its annual conference in Singapore, said: "We impose conditions on the money that we lend to try to ensure that it's well spent."
Christian Aid, which is organising a march on the Treasury later today calling for the World Bank and the International Monetary Fund to stop pursuing policies harmful to people living in developing countries, welcomed the Government's decision to withhold the funding.
The charity's head of policy, Charles Abugre, said: "This is a very welcome development and vindicates Christian Aid's long-held belief that economic conditions imposed on poor countries by the bank and the fund can be disastrous for poor countries.
"But this only a first step. We now urge Britain to go the extra mile and withdraw all its monies. Until these organisations fundamentally reform and allow poor countries space to develop, they will remain a busted flush which we must not underwrite."Reuse content