Fragile and war-torn countries should lose British aid if their governments flout agreements made with the UK, a committee of MPs will say today.
The International Development Committee said it was right for the Government to increase the amount of aid to states in a delicate position, highlighting the Democratic Republic of Congo and Rwanda.
The Department for International Development (DFID) is increasing its focus on fragile states and will spend 30% of Official Development Assistance (ODA) - approximately £3,414 million - in these states by 2015.
But in a report published today the committee, chaired by Liberal Democrat Malcolm Bruce, has said the aid must be conditional.
Mr Bruce said: "There are obvious benefits of providing aid to fragile states. It is, after all, cheaper to prevent conflicts, than to deal with wars and their aftermath.
"Nevertheless, there are considerable risks in spending aid money in conflict scarred states and the Government must be frank and open about this if it wants to convince the public that its approach is the right one, both morally and politically."
"In countries where fraud and corruption are rife, DFID will not always be able to mitigate against this adequately - especially where it sub-contracts delivery of its programmes to third parties."
"This means it may not be able to guarantee value for money for every pound it spends."
The committee report urges the Government to set out specific governance conditions as a requirement for the receipt of aid - and conditions under which aid will be withdrawn.
The DFID budget was one of two protected by the Government following the last spending review in 2010.
Shadow international development secretary Ivan Lewis said: "We fully support the decision to prioritise UK aid spending in fragile and conflict-affected states.
"But with the UK spending 30% of its ODA in these states by 2015, it is crucial that this expenditure is delivered with a coordinated and strategic approach and maximum transparency.
"I hope that Andrew Mitchell will use this opportunity to address the questions raised in the report and clarify his department's policy towards conflict and fragile states.
"It is important that UK aid is targeted towards those that need it the most and are the hardest to reach, but in these difficult financial times we also have a particular responsibility to strengthen public confidence and support."
Andrew Mitchell, International Development Secretary, said: "This report says the coalition Government is right to focus aid on fragile and conflict-affected states, to tackle crises before they begin.
"We make absolutely clear to countries that transparency and good governance are vital, and we are prepared to withhold funding through governments when our standards are not met, as we have done in Malawi."