Joint military exercises and exchange programmes will continue, he added.

"On the topical issue of Indian troops for Iraq, the United States had obviously hoped that India would take a different decision," Blackwill said in his farewell address.

"But the transformation of US-India relations that I am describing will not be affected by this particular outcome of India's governmental democratic processes."

The decision, which ended weeks of debate over the request for some 17,000 troops to join an Iraq stabilization force, was announced Monday in New Delhi after two hours of deliberations by Prime Minister Atal Behari Vajpayee's security cabinet.

There was stiff resistance from opposition parties to the proposal and the government feared a political backlash in the event of heavy losses by Indian troops.

India had opposed the US-led war in Iraq, but Blackwill said differences of opinion were inevitable among democratic nations.

"This time, and contrary to the dismal decades of the Cold War, we have disagreed in our official exchanges concerning Iraq without vitriol, without accusation, and without inflamed rhetoric," Blackwill said.

The outgoing diplomat also hinted the matter may not be completely closed as the Indian cabinet had suggested troops could be deployed if the United Nations were to explicitly endorse a stabilization force.

Relations between India and the United States have undergone a fundamental transformation in the last two years, with Washington no longer viewing India as a renegade nuclear power and New Delhi moving away from its position that Washington was a modern-day colonial power.

"There was little diplomatic cooperation between Washington and New Delhi. Virtually no military-to-military interaction took place," Blackwill said, in contrast to the monthly joint military exercises and engagements currently underway and joint plans for an exchange programme for fighter aircraft.

Defence relations with the United States were strained in the past due to sanctions imposed by Washington after India tested nuclear weapons in May 1998. They were lifted after India joined the US-led "coalition against terrorism" in the aftermath of the September 11, 2001 attacks.

Despite Blackwill's remarks, the Hindustan Times daily said Thursday that US officials had told New Delhi they felt "let down" by India's decision not to send troops, something which could affect Indo-US ties in "critical areas."

"(Indian) officials believe that Washington's displeasure stems from the fact that the US was heavily banking on Indian support as there was domestic pressure on President George W. Bush to reduce US forces in Iraq," it said.

"Key US divisions were promised that they would be sent back once the Indian contingent was shipped in."

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