There must be "proper investigations" that arms sold to Saudi Arabia have not been used in breach of international law in Yemen, Philip Hammond said.
The Foreign Secretary said reassurances by Riyadh were not sufficient alone to prevent the possible suspension of future exports if it was shown the terms of the licences had been defied.
Amnesty International has called for a suspension of all sales of weaponry to the Gulf State because of a mounting civilian death toll in a Saudi-led coalition's assault against Iran-backed Houthi rebels who overthrew Yemen's government.
It says the UK could be "party to terrible war crimes".
Labour leader Jeremy Corbyn has singled out the use of UK weapons in the Yemen campaign as a consequence of "fawning and uncritical support to regimes ... who abuse their own citizens and repress democratic rights".
Mr Hammond confirmed that exported British arms were being deployed by the Saudis but said that could be legitimate.
"Those weapons, some of them, are being used in Yemen. The important thing is that they are being used legally in an international armed conflict," he told BBC2's Newsnight.
"There have been accusations of breaches of international humanitarian law. We regularly intervene with the Saudis to encourage them to be transparent with us.
"I was in Saudi Arabia a couple of weeks ago and we discussed precisely this issue. The Saudis deny that there have been any breaches of international humanitarian law.
"Obviously that denial alone is not enough; we need to see proper investigations and we need to work with the Saudis to establish that international humanitarian law has been complied with.
"We have an export licensing system that responds if we find that it is not. We will then find that we cannot license additional shipments of weapons."