Islamabad - Pakistani troops fired on U.S. helicopters on Thursday in a sharp escalation of tensions between the two allies, who gave conflicting accounts of the incident.

Pakistan's military said its soldiers fired warning shots at the helicopters after they intruded into Pakistani airspace. But the United States said the aircraft were operating inside Afghanistan.

"The flight path of the helicopters at no point took them over Pakistan," Pentagon spokesman Bryan Whitman said.

"This is an unfortunate incident. It just goes to demonstrate the importance of coordination along that border," he added. "The Pakistanis have to provide us with a better understanding of why this took place."

Pakistani military spokesman Major-General Athar Abbas said: "There were two helicopters from Afghanistan that crossed into Pakistani territory. Our soldiers fired warning shots and those helicopters returned fire and flew back."

Washington denied returning fire. There were no casualties, nor were the helicopters damaged.

CROSS-BORDER OPERATIONS

The rugged Pakistan-Afghanistan border region is a crucial theater for the United States in fighting al Qaeda and the Taliban. Frustrated by an intensifying insurgency, U.S. forces have stepped up attacks inside Pakistan with repeated missile strikes and a helicopter-borne ground assault this month.

Pakistan strongly condemned those operations and said it would stand up to cross-border aggression and refuse to tolerate any violation of its territory.

A U.S. military spokeswoman said the two OH-58 helicopters in Thursday's incident had been flying a routine operation and were about 11.5 km (7 miles) on the Afghan side of the border when they "received small arms fire from a Pakistani military checkpoint."

"We avoided a serious incident," Whitman said. But he added: "The incident is troubling, no doubt."

Adding to the confusion, Pakistani President Asif Ali Zardari said in New York that his forces had only fired warning flares, "just to make sure that they know they have crossed the border line."

Speaking to reporters with U.S. Secretary of State Condoleezza Rice, Zardari said it was often hard to make out the border with Afghanistan. Rice echoed: "Yes, the border is very, very unclear."

She told Zardari, sworn in this month after a bruising battle to force the resignation of former military leader and U.S. ally General Pervez Musharraf: "There is a lot that still can to be done and this is a new day for Pakistan."

The United States said it was suspending consular services -- such as issuing visas -- in Pakistan because of the worsening security situation, highlighted by a suicide bomb attack on Islamabad's Marriott Hotel that killed 54 people on Saturday. It said the move was unrelated to the helicopter incident.