A leading US senator suggested tonight that the New York Times and other news organisations publishing the US embassy cables being released by WikiLeaks could be investigated for breaking US espionage laws.

Joe Lieberman, the chair of the Senate homeland security committee, told Fox News: "To me the New York Times has committed at least an act of, at best, bad citizenship, but whether they have committed a crime is a matter of discussion for the justice department."

Lieberman also said that the department of justice should indict Julian Assange, the founder of WikiLeaks, under the 1917 Espionage Act and try to extradite him from the UK. Asked why this had not happened, Lieberman admitted there was probably an argument going on over how to charge Assange.

"I think this is the most serious violation of the Espionage Act in our history," Lieberman said, adding: "It sure looks to me that Assange and WikiLeaks have violated the Espionage Act."

At the daily state department briefing in Washington, DC, Philip Crowley, the department's press spokesman, said: "What WikiLeaks has done is a crime under US law."

Assange has been at the centre of an international row since WikiLeaks released a huge tranche of US embassy cables, in conjunction with five news organisations including the Guardian and New York Times, at the beginning of last week. WikiLeaks gave the entire collection of cables to Der Spiegel, El País, Le Monde and the Guardian, and the Guardian shared its documents with the New York Times.

"The New York Times has not been contacted by anyone in law enforcement" said a spokeswoman from the paper.

Today, Assange was remanded in custody in a separate case, relating to rape charges against him in Sweden.

Earlier today, Robert Gates, the US defence secretary, welcomed Assange's arrest in the sex case. Speaking to reporters on a visit to US troops in Afghanistan, Gates said: "I hadn't heard that, but that sounds like good news to me."

WikiLeaks faces increasing problems in continuing to operate. Today, Visa said it had suspended all payments to the organisation "pending further investigation", while MasterCard said it was "taking action to ensure that WikiLeaks can no longer accept MasterCard-branded products".

Assange defended the leak of the embassy cables in an article in the Australian today, saying: "The swirling storm around WikiLeaks today reinforces the need to defend the right of all media to reveal the truth."

Meanwhile, Colonel Dave Lapan, a spokesman for the US department of defence, said there were indications of foreign powers "pulling back" from their dealings with the US since the leaking of the cables.

Lapan declined to cite any specific examples, the Associated Press news agency reported, including whether foreign officials had said they would no longer trust the US with their secrets, but told reporters that "believing the US is not good at keeping secrets ... certainly changes things," and that "generally, there has been a retrenchment" in co-operation.