Washington has accused Pakistan of illegally modifying a US-supplied anti-ship missile, US media say.
The US believes the Harpoon, sold to Pakistan by the Reagan administration, has been altered for land-based use, the New York Times reported.
Islamabad says the accusations are "incorrect and based on wrong intelligence", Pakistani media say.
The US protested to Pakistan's PM in June, the Times said, fearing increased tension with Pakistan's rival, India.
The Times quoted a senior US administration official as saying: "The focus of our concern is that this is a potential unauthorised modification of a maritime anti-ship defensive capability to an offensive land-attack missile."
The paper said it had been told there was a secret missile test on 23 April.
It said it was feared the missile would be a significant addition to Pakistan's military arsenal, allowing its small navy to strike at land-based targets.
The alteration, if proved, would be a violation of the US Arms Control Export Act.
The paper said the revelation came at a "delicate" time, as Congress mulled an administration request for $7.5bn (£4.6bn) in aid to Pakistan over the next five years.
Pakistan's foreign ministry on Sunday "categorically rejected" the accusations in the article.
The Associated Press of Pakistan also quoted Pakistan's ambassador to the United States, Hussain Haqqani, as saying the claims were incorrect.
"We will make sure that the US understands the correct picture and we will fight back periodic efforts to falsely blame Pakistan, which remains a critical US ally in fighting terrorism," Mr Haqqani said.
"Instead of false accusations, US media should help Pakistan secure the help it needs to fight our common enemy, viz terrorism."
India has not responded officially to the row but ties with Pakistan remain delicate in the wake of last year's insurgent attacks on the Indian city of Mumbai.
The nations have fought three wars since Partition in 1947.
Article source:http://news.bbc.co.uk/2/hi/south_asia/8229466.stm
