A source told British daily The Guardian that Michael Fallon is among the ministers to have known about the investigation for about a month.
Multiple rights groups, including Amnesty International and Human Rights Watch, have on various occasions reported the use of cluster bombs by Riyadh in Yemen.
In May, Amnesty provided evidence showing that British-made cluster bombs had been used by Saudis against civilians in Yemen.
The revelation is likely to raise calls on the government to stop the sale of arms to Saudi Arabia, especially after reports surfaced over Washington’s decision to suspend the supply of some precision-guided munitions, over concerns of widespread civilian casualties.
A senior military source said the issue of British-made cluster munitions was “something that has been raised at the highest possible levels and we have been trying to establish definitively for some time.”
“The government takes such allegations very seriously. We have analyzed the case carefully using all available information, considering all possibilities, and raised the issue with the Saudi-led coalition,” a government spokesman said.
The UK is a signatory to a 2010 international treaty banning the use of cluster munitions.
Saudi Arabia began its military aggression against Yemen in late March, 2015 in a bid to restore power to Saudi-backed former president Abd Rabbuh Mansur Hadi.
The Saudi campaign has claimed the lives of more than 11,400 people, according to figures compiled by the Yemeni non-governmental monitoring group Legal Center for Rights and Development.