ISLAMABAD, Feb 24: Cooperation between the American and Pakistani intelligence agencies has been scaled back because of an incident involving a CIA contractor shooting two men in Lahore, Pakistani intelligence officials said on Thursday.

“It's not business as usual; it's not open war,” the official said. “Cooperation and operations together will continue at a lesser scale.”

Another intelligence official denied rumours that the two agencies were not working together.

“We are not ready to split,” he said. “There has been a patch up because we have both realised that in the larger interest of the region and the war on terrorism, CIA and ISI must work together.”

The episode has inflamed anti-US sentiment in Pakistan, effectively giving the government little choice but to prosecute him in court.

Davis has been revealed to be a CIA contractor detailed to provide security at the US consulate in Lahore. The United States says the assignment gives Davis diplomatic immunity and he should be released immediately.

The US embassy in Islamabad declined to comment.

The possible presence of more CIA contractors like Davis worries the ISI because they don't know how many there are, their identities or their duties. Officials say there could be “hundreds”.

“We are concerned,” the first official told Reuters. “We don't know how many and we have asked them (CIA) to give this information to us. But they haven't done that yet.”

It is widely thought the CIA is running a network of spies in Pakistan for a number of reasons: identifying militant targets for a campaign of strikes by unmanned drone aircraft, gathering intelligence on militant groups and on Pakistan's nuclear programme.

Downward spiral

Signs of strain were evident in a letter the ISI sent to the Wall Street Journal in response to an article the newspaper published on the tension between the agencies.

“It is regrettable that CIA leadership on many occasions has failed to show respect to the relationship of the two agencies and has acted with arrogance towards ISI which has resulted in weakening the relationship on which it is entirely dependant,” the ISI said, according to a copy seen by Reuters.

“Involvement of CIA with Raymond Davis is beyond any shadow of doubt. Post-incident conduct of CIA has virtually put the partnership into question. Irrespective of the commonality of objectives in this war on terror, it is hard to predict if the relationship will ever reach the level at which it was prior to the Davis episode.”

According to a document obtained by AP and interviews with US and Pakistani officials, ISI is ready to split with the CIA because of frustration over what it calls heavy-handed pressure and its anger over a covert US operation involving hundreds of contract spies.

CIA spokesman George Little said any problems between the two agencies would be sorted out.—AP