Boasted by its maker as "the safest and best-protected wheeled vehicle in its class", the Dingo 2 can carry eight infantry personnel and is equipped with a top-mounted machine gun as standard. The vehicle is also equipped with nuclear, biological and chemical protection system.

The report said the national security council chaired by Chancellor Angela Merkel has already given the green light in principle, although a final decision on the deal has yet to be made.

Proposed arms deals with Saudia Arabia have drawn intense domestic attention and criticism. Social Democrat chancellor candidate Peer Steinbruck said last week that it was "extremely dangerous that Germany has become the world's third largest exporter of weapons."

However, Angela Merkel reportedly said in a speech in October that it is in Germany's interests to "enable partners to intervene effectively to preserve or re-establish security and peace in their regions."

Earlier this month, Der Spiegel magazine reported Saudia Arabia wanted to buy several hundred BOXER armoured fighting vehicles, another type of armoured vehicle made by Artec, a joint-venture of Rheinmettal Defence and Kraus-Maffei Wegmann.

According to other unconfirmed media reports, Germany gave pre-approval for the export of 270 Leopard 2 tanks to Saudi Arabia in 2011.