"This affair is a momentary embarrassment, but it will not harm the privileged relations between Israel and the United States," a government official told AFP, asking not to be named.

"Neither of the two countries has any interest in poisoning things," the official said, adding that US President George W. Bush and Secretary of State Condoleezza Rice were both due to visit Israel at the beginning of May.

"Their wish is to facilitate an Israeli-Palestinian accord before the end of Bush's mandate and a crisis would only compromise this project," the official added.

On Tuesday the US authorities announced the arrest of army veteran Ben-Ami Kadish, 84, on charges that he disclosed secret defence information, including on nuclear weapons, to Israel in a case linked to the 1980s Jonathan Pollard spy scandal.

A US Navy officer, Pentagon spy Pollard passed thousands of secret documents to Israel in 1984 and 1985 in a case which rocked US-Israeli relations. He is serving a life term after being convicted of spying.

Kadish, who worked as a mechanical engineer at a US Army weapons centre in New Jersey, provided classified documents to Israel's consul for science affairs in New York from 1979 to 1985, the Justice Department said.

The authorities also accused Kadish of illegally acting as an agent for Israel without notifying the US Attorney General's office.

Washington registered its concern over the affair with its key Middle East ally.

"We would expect that Israel would not be engaged in such activities," said Tom Casey, a US State Department spokesman.

Prime Minister Ehud Olmert's office, which is responsible for the Mossad intelligence service, declined to comment.

Foreign affairs spokesman Arye Mekel said the Israeli authorities were first informed of the affair through the US media.

"Then we received on Tuesday evening formal notification from the United States about the legal proceedings, which was delivered through our embassy in Washington," Mekel said.

"We are now following developments in this affair," he added.

Tzahi Hanegbi, who heads parliament's defence and foreign affairs committee, insisted in an interview with public radio that Israel fully respected its commitment "not to conduct espionage activities in the United States since the Pollard affair."

The government publicly admitted in 1998 that Pollard had been an agent acting on its behalf and awarded him Israeli citizenship.

"What apparently is irritating the Americans is that we had told them Pollard was our only agent, and this new affair could raise questions," said former Mossad boss Danny Yatom, now a member of parliament.

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