raymond davis
A Pakistan court has deferred judgement on whether Raymond Davis has diplomatic immunity

Islamabab - A Pakistani intelligence official said Monday that an American in custody for killing two men was an undercover CIA contractor, setting off new friction in a crisis with the United States.

Washington voiced fear for the safety of Raymond Davis, who says he acted in self-defence. The United States has put intense pressure on Pakistan to free him, arguing that he enjoys diplomatic immunity.

But the unpopular government in Pakistan is also feeling heat from the political opposition not to cave in to US demands, with analysts even warning that the case could bring down the ruling Pakistan People's Party (PPP).

"It is beyond any shadow of a doubt that he was working for CIA," an official from Pakistan's Inter-Services Intelligence (ISI) agency told AFP on condition of anonymity.

"He's on contract. He's not a regular CIA guy, but he's working for CIA. That's confirmed," the Pakistani official said.

US Senator Lindsey Graham also last week referred to Davis as an "agent." Davis was arrested in eastern Pakistan, the base of virulently anti-Indian groups such as Lashkar-e-Taiba which was linked to the 2008 siege of Mumbai.

Police told AFP they recovered a Glock pistol, four loaded magazines, a GPS navigation system and a small telescope from his car, after the shooting on a busy street in Lahore on January 27.

A third Pakistani was struck down and killed by a US diplomatic vehicle that came to Davis's assistance. US officials denied Pakistan access to the vehicle and the occupants are widely believed to have left the country.

Washington has postponed a round of talks with Afghanistan and Pakistan, but Islamabad has said the matter is before the courts, although one compromise would be for the families to pardon Davis, in keeping with Islamic law.

"We remain concerned about him and our message to Pakistan remains he should be released as soon as possible," State Department spokesman Philip Crowley said in Washington.

Crowley said Pakistan has told the United States that Davis is staying "in the safest possible location in Lahore," adding: "Clearly, we hold the government of Pakistan fully responsible for his safety."

Prime Minister Yousuf Raza Gilani told the lower house on Monday that he was confident "that both the Pakistani and the US governments will not allow the Davis case to come in the way of mutually beneficial partnership".

He said Pakistan was mindful of its international obligations under the Vienna Convention and other agreements.

But he added: "I want to assure this House and the nation that my government will not compromise on Pakistan's sovereignty and dignity. We are a responsible government and conscious of the sentiments of our people."

On Monday, a judge at Lahore's top court ordered the government to appear on March 14 to respond to private petitions related to Davis' incarceration, the law on diplomatic privileges.

The court last week deferred any judgement on whether Davis has diplomatic immunity and gave the foreign ministry until March 14 to determine his status.

In Washington, a US official said that the diplomatic immunity was "about as clear as it gets under international law."

The US embassy in Islamabad informed Pakistan more than a year ago, on January 20, 2010, that Davis was working for its "administrative and technical staff" and Pakistan did not object, the official said on condition of anonymity.

"Any other form of action, including a judicial proceeding or any other action, is inconsistent with his status as a member of a diplomatic mission. It would only compound the violations of international law," the official said.

"When someone enters our country, if that person is notified as a member of the administrative and technical staff of a diplomatic mission, that's the end of the story," he said.

US Senator John Kerry visited Pakistan last week to express regret and say Davis would face a criminal investigation at home, but hopes for a swift resolution now appear unlikely.

Local analysts suggested Pakistani intelligence had deliberately decided to complicate the case in order to put pressure on the government and the United States, with whom relations have been troubled over the war in Afghanistan.

"This would be seen as a kind of deliberate attempt to make the situation more difficult and complex to handle, and this provides additional material to the Islamic groups to adopt a hardline stance," said analyst Hasan Askari.

"These (intelligence) groups are not happy with the way America was building pressure on Pakistan on the war on terrorism.

"If it goes to the street and massive agitation, all political parties will find it a good opportunity to knock the PPP out of power," he said.