The US administration confirmed it knew about the reactor at Pakistan's Khushab nuclear complex after satellite images were released by a US nuclear non-proliferation group.

The International Institute for Science and International Security (ISIS) said the heavy water reactor could produce more than 200 kilogrammes (440 pounds) of weapons grade plutonium a year. This would be enough to make 40-50 nuclear weapons every year.

Pakistan is believed to currently have 30-50 uranium warheads in all, "which tend to be heavier and more difficult than plutonium warheads to mount on missiles," the Washington Post reported Monday.

"South Asia may be heading for a nuclear arms race that could lead to arsenals growing into the hundreds of nuclear weapons, or at a minimum vastly expanded stockpiles of military fissile material," the ISIS warned.

White House spokesman Tony Snow said: "We have been aware of these plans and we discourage any use of that facility for military purposes such as weapons development."

He added: "Pakistan of course is outside the Non-Proliferation Treaty and therefore they do develop their capabilities independently."

Neither Pakistan nor India are signatories to the Non-Proliferation Treaty and as the US Congress prepares to hold new debates on a proposed civilian nuclear cooperation deal with India, the ISIS report on Pakistan has set alarm bells ringing among some lawmakers who oppose the India deal.

Representative Ed Markey, the Democratic co-chairman of the Bipartisan Taskforce on Nonproliferation, said: "The nuclear arms race in South Asia is about to ignite, and instead of doing everything possible to stop this vicious cycle, the Bush Administration is throwing fuel on the fire.

"If either India or Pakistan starts increasing its nuclear arsenal, the other side will respond in kind; and the Bush Administration's proposed nuclear deal with India is making that much more likely."

He called on President George W. Bush to press India and Pakistan to suspend production of bomb-grade fissile materials while an international treaty limiting bomb-making material stockpiles is negotiated.

"Both Pakistan and India need to reverse their decisions to increase their nuclear arsenals, and take a step back from the brink," Markey said.

Khushab is in Pakistan's Punjab province. The new reactor is adjacent to Pakistan's only plutonium production reactor, a 50-megawatt unit that began operating in 1998.

The dimensions of the new reactor suggest a capacity of 1,000 megawatts or more, according to ISIS experts David Albright and Paul Brannan.

Pakistan would not confirm plans for the new reactor. In Islamabad, Foreign Ministry spokeswoman Tasnim Aslam said the existence of the Khushab nuclear facility "ought to be no revelation to anyone because Pakistan is a nuclear weapon state.

"I have no specific comments on Pakistan's facility or details of the facility and our programme in this sector."

India made no immediate comment about the ISIS report or the US administration's reaction.

The ISIS also called for accelerated efforts to reach agreement to halt production of fissile materials for nuclear weapons.

"Not only are such arsenals a waste of precious resources, they increase instability in the region and could needlessly provoke China to respond by increasing the size and lethality of its own nuclear capabilities," said the ISIS report.

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