The caution came at a meeting of Pakistan's National Command Authority (NCA) chaired by President Pervez Musharraf, a statement said. The body oversees the country's nuclear strategy.

The long-delayed deal announced in July in Washington allows US exports of civilian nuclear fuel and technology to India for the first time in 30 years.

"The NCA noted that the US-India nuclear agreement would have implications on strategic stability as it would enable India to produce significant quantities of fissile material and nuclear weapons from unsafeguarded nuclear reactors," the statement said.

The deal has caused unease in Islamabad, which has firmly allied itself with Washington in its post-9/11 "war on terror" and is suspicious of growing US ties to neighbouring India.

Muslim majority Pakistan and mainly Hindu India have fought three wars since independence from Britain 60 years ago and they carried out tit-for-tat nuclear detonations in 1998 that alarmed the world.

The NCA said that peace in South Asia "would have been better served if the United States had considered a package approach for Pakistan and India", neither of which are signatories to the nuclear Non-Proliferation Treaty.

Pakistan would continue to pursue its military and civilian nuclear programmes, it added.

"While continuing to act with responsibility in maintaining credible minimum deterrence and avoiding an arms race, Pakistan will neither be oblivious to its security requirements, nor to the needs of its economic development which demand growth in the energy sector," the statement said.

President George W. Bush said last week he looked forward to working with the Democratic-controlled Congress to implement the nuclear deal, saying it was "another step" in ties with India, which he called "a vital world leader."

The accord also allows India to reprocess spent fuel under safeguards imposed by the International Atomic Energy Agency, going one step further than a law passed by the US Congress in December.