"Saudi Arabia is a good partner in the war against terrorism but can do more," said White House spokesman Ari Fleischer.

Mr Fleischer said a working-group of officials was looking at how to improve Saudi Arabia's ability to take action against militant groups.

The US is calling on Riyadh to monitor charities to ensure no funds fall into the hands of terrorist groups.

The BBC's Justin Webb in Washington says the normally warm Saudi-American friendship is under great strain.

'Unilateralism threat'

An unnamed official, quoted by the Washington Post, said the United States would ask the Saudis to act on intelligence about terrorist financing and if they failed, the US would take unilateral action.

"We tell them the problem and leave it to them to solve, presuming they will act in good faith. But if they do not act in 90 days, we assume solving the problem is beyond their ken and the United States will solve it," the official said.

Nine wealthy individuals - seven of them Saudi - are believed by the United States to be at the core of financing the al-Qaeda network.

The newspaper report has not been denied by the administration, though it has played down talk of an ultimatum.

The FBI is also investigating recent news reports suggesting that a donation by Princess Haifa al-Faisal of Saudi Arabia may have indirectly helped two of the men who carried out the 11 September hijacking attacks in New York and Washington.

The Saudis are co-operating with the investigation.

Fifteen of the 19 hijackers involved in the 11 September attacks were from Saudi Arabia.