Washington/Islamabad: The United States and Pakistan inched closer to open confrontation on Thursday, with top US military officer accusing Pakistan's intelligence agency in the strongest terms yet of involvement in violence against US targets in Afghanistan.

Admiral Mike Mullen called the Haqqani militant network a "veritable arm" of Pakistan's powerful ISI intelligence service, which he said supported the group's attack last week on the US Embassy in Kabul, a blow to US efforts to bring the Afghan war to a peaceful end.

Pakistan's interior minister swiftly rejected the US accusations of Islamabad's links to the Haqqanis, one of the most feared insurgent groups operating in Afghanistan.

The minister, Rehman Malek, also warned against a unilateral US ground attack on the Haqqanis, who are based in Pakistan's ungoverned tribal territories.

"The Pakistan nation will not allow the boots on our ground, never. Our government is already cooperating with the US... but they also must respect our sovereignty," Malek said in an interview with Reuters.

The harsh words appear to represent a new low in US-Pakistani relations, which had barely begun to recover from the unannounced US Special Forces raid that killed Osama Bin Laden in the Pakistani city of Abbottabad in May.

The tensions could have repercussions across Asia, from India, Pakistan's economically booming arch-rival, to China, which has edged closer to Pakistan in recent years.

A complete break between the United States and Pakistan - sometimes friends, sometimes adversaries - seems unlikely, if only because the United States depends on Pakistan as a route to supply US troops in Afghanistan, and as a base for unmanned US drones.

Washington does not want to see further instability in the nuclear-armed country. But support in the US Congress for curbing or conditioning aid to Pakistan is rising rapidly.

And Mullen, CIA Director David Petraeus and Secretary of State Hillary Clinton have all met their Pakistani counterparts in recent days to demand Islamabad rein in militants.

Continue engagement

Mullen, who appeared with Defence Secretary Leon Panetta before the Senate Armed Services Committee, said US aid to Pakistan "needs to be conditioned" on Pakistan's cooperation against militants. But he said the United States had to be careful about the conditioning as well.

"I think we need to continue to stay engaged. And I don't know when the breakthrough is going to take place ... We need to be there when the light goes on," Mullen said.

A separate Senate committee voted on Wednesday to make economic and security aid to Pakistan conditional on its cooperation in fighting militants such as the Haqqani network.

Mullen, who is about to step down as chairman of the Joint Chiefs of Staff, has been a defender of US engagement with Pakistan and has met more than two dozen times with his Pakistani counterpart, General Ashfaq Kayani.

The Haqqani network is one of three allied insurgent factions fighting US-led Nato and Afghan troops under the Taliban banner in Afghanistan.

In earlier testimony, Mullen said "the Haqqani network ... acts as a veritable arm of Pakistan's Inter-Services Intelligence Agency".

"With ISI support, Haqqani operatives planned and conducted (a September 11) truck bomb attack, as well as the assault on our embassy," Mullen said.

Insurgents struck the US Embassy in Kabul and nearby Nato headquarters on September 13, killing at least seven people and wounding 19.

Of the Haqqanis, Mullen said, "We also have credible intelligence that they were behind the June 28 attack against the Inter-Continental Hotel in Kabul and a host of other smaller but effective operations."

Malek, the Pakistani minister, issued a flat denial of such accusations.

"If you say that it is ISI involved in that (embassy) attack, I categorically deny it. We have no such policy to attack or aid attack through Pakistani forces or through any Pakistani assistance," he told Reuters.

The US  accusations underscore mounting exasperation in the Obama administration which is struggling to put an end to the long war in Afghanistan.

Some US intelligence reporting alleges that the ISI specifically directed or urged the Haqqani network to carry out the attack on the embassy and a Nato headquarters in Kabul, two US officials and a source familiar with recent US-Pakistan official contacts told Reuters on Wednesday.

Mullen said the embassy attack and Tuesday's bombing that killed former Afghan President Burhanuddin Rabbani, who personified hopes for brokering peace negotiations with the Taliban, were examples of the Taliban's shift toward high-profile violence.

Such violence has been a blow to Washington's hopes to weaken a stubborn militancy and seal a peace deal with the Taliban as it plans to gradually draw down the US force 10 years after the Afghan war began.

"These acts of violence are as much about headlines and playing on the fears of a traumatised people, as they are about inflicting casualties - maybe even more so," Mullen told the Senate panel.

"We must not misconstrue them. They are serious and significant in shaping perceptions but they do not represent a sea change in the odds of military success."