The US Congress Friday approved a bill to implement key anti-terrorism recommendations of the independent probe into the September 11 attacks in 2001 that will become law if President George W. Bush signs it.

Pakistan says the new law could undermine relations between the "war on terror" allies because it contained "unsubstantiated" allegations.

"The draft bill... contains references and provisions that cast a shadow on the existing cooperation between Pakistan and US," the ministry said in a statement at the weekend.

"Regardless of the fact that the bill emphasises the importance attached by the United States to long-term strategic relationship with Pakistan... the bill is disappointing from Pakistan's point of view," it said.

It said references in the bill relating to the existence of so-called terrorist "safe havens" or "proliferation networks" in Pakistan were unsubstantiated and already rejected by Islamabad.

"Inclusion of these references in the bill cannot contribute to the trust that is necessary for the stated US objective to establish a strategic relationship with Pakistan."

Pakistan said the bill which linked US aid to the South Asian country for its performance in the fight against terrorism could damage ties between the two countries just like the 1985 Pressler Amendment on nuclear proliferation in South Asia which banned most economic and military assistance to Pakistan.

"Conditionalities have been introduced for the continuation of US security assistance to Pakistan which is primarily aimed at capacity building in counter-terrorism. This is reminiscent of the infamous Pressler Amendment."

The draft bill comes at a time when Pakistan is already upset by US threats to strike militants holed up near the Afghan border.

President Pervez Musharraf on Friday firmly rejected US statements about attacking militants on its soil saying American forces would not be allowed to operate in the area.

Musharraf also rejected US allegations that Osama bin Laden's Al-Qaeda terror network was regrouping in Pakistan's rugged tribal belt, where hundreds of Islamic militants took shelter after US-led forces overthrew Afghanistan's Taliban regime in 2001.

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