The Government is withholding £50m from the World Bank in protest at the conditions it imposes on aid packages for developing countries.
Hilary Benn, the International Development Secretary, criticised the bank for encouraging privatisation and trade liberalisation through its aid packages.
Since becoming head of the World Bank last year, Paul Wolfowitz has held back hundreds of thousands of dollars of loans and contracts to countries such as Chad.
Mr Benn told the BBC, on the eve of the annual meeting of the bank and the International Monetary Fund in Singapore, that the payment will be withheld until the bank pays greater heed to aid recipients' priorities.
"When it comes to fighting corruption, to improving transparency, upholding human rights, above all making sure the money is spent on reducing poverty, I'm all in favour of attaching conditions," Mr Benn said. "But when it comes to economic policy choices... things like privatisation and trade liberalisation, I don't think it's right that we should be telling other countries what to do. The UK doesn't do that any more with its aid."