"We're concerned about Syria's destabilising influence in the Palestinian territories through these kinds of extremist groups," David Welch, the State Department's assistant secretary for near eastern affairs, said in testimony to the US Senate's Foreign Relations committee.

He made his comments as the US government on Thursday moved to freeze the assets of Syria's interior minister and a military intelligence chief, accusing them of abetting terrorism and destabilising the region.

The Treasury Department said Syrian Interior Minister Ghazi Kanaan and Rustum Ghazali, identified as the chief of Syrian military intelligence for Lebanon, had helped destabilise the region.

The department did not comment on the type or extent of the two men's US assets.

Tensions between the United States and Syria have increased recently over US allegations that Damascus was hiding agents in neighbouring Lebanon, undermining efforts to stabilise Iraq and supporting terrorism in the region.

In May, President Bush extended for another year the economic sanctions imposed on Syria last year and said the Arab country remained a threat to the United States.

The Treasury Department, in this latest move to isolate Syria financially and pressure its government, named Kanaan and Ghazali as "Specially Designated Nationals" of Syria -- a move that freezes any assets they hold in the United States and prohibits US citizens from doing business with them.

Speaking about Lebanon, despite the pullout in April of Syrian troops, ending a 29-year presence, Welch said: "Although Syrian military units have withdrawn, we still have concern about the extra size of their influence there in unhealthy ways."

Meanwhile, in Iraq, "Syria is presently the least-protected monitored border of any of the contiguous states to Iraq, which has some important and serious consequences for the violence and terrorism that's going on there," Welch said.

"What we've been trying to do is speak directly to the Syrian government about those concerns, and urge them to be responsible," as well as encouraging other governments with "closer political relationships with Syria" to impress upon Damascus the need to be more responsive to US concerns.

Welch added, without elaborating, that Washington is also weighing "unilateral American measures that we have in our inventory."

A Syrian source told Reuters in Damascus that Syria would not give into US pressure.