The fresh ruling about US compliance with a 2005 WTO judgement followed a renewed challenge from tiny Antigua and Barbuda, which claimed that Washington had not brought its legislation into line since then.

The Caribbean island, with a population of about 69,000, is a centre for offshore Internet gaming operations, attracting large numbers of US residents to its casino-style games and betting services.

The WTO had given the United States until April 2006 to modify its laws, and Washington subsequently gave a formal assurance to the organisation's disputes settlement body that it had complied.

Friday's WTO ruling found that the United States had instead enacted legislation that maintained "ambiguity," according to the document.

"The Panel concludes that the United States has failed to comply with the recommendations of this panel," it added.

Last October, President George W. Bush followed up earlier legal changes by signing new legislation that effectively put a stranglehold on all Internet gambling by outlawing the processing of Internet bets by US banks.

Experts say the vast majority of online gamblers in the United States use some 2,000 websites run that are largely located in offshore centres like Antigua and Gibraltar.

Americans are the biggest gamblers in the world, accounting for 80 percent of an estimated 12 billion dollars generated by online gaming.