Pakistani officials say an American man in custody for the killing of two men in the Pakistan city of Lahore last month is a CIA agent.

In remarks bound to inflame tensions between Islamabad and Washington, a Pakistani intelligence official told a news agency Raymond Davis was working as an undercover CIA contractor when he shot two Pakistani men who he claims threatened him.

The anonymous Pakistani official reportedly said it is "beyond any shadow of a doubt" that Davis was working for the CIA.

Davis says he acted in self-defence when he shot two motorcyclists on a busy street in the eastern Pakistani city late last month.

A separate report in The Guardian newspaper claims Pakistani officials were well aware of the American's CIA status but have so far kept quiet under pressure from the US, which says he is a diplomat immune to prosecution.

The British report claims American media outlets also knew but suppressed the information at the request of the Obama administration.

Washington has postponed a round of talks with Pakistan to pressure Islamabad to release Davis, but so far Pakistan insists the matter will be resolved by its courts.

The US has not commented on the latest claims, but US sources closely following the case said Davis, who is being held in a Lahore jail amid a tense diplomatic dispute, was working as a "protective officer".

Davis's duties as a protective officer - essentially a bodyguard - were to provide physical security to US embassy and consular officers, as well as visiting American dignitaries, US officials who declined to be identified told Reuters.

The officials strongly denied news reports alleging Davis was part of a covert CIA-led team of operatives conducting surveillance on militant groups in Pakistan.

The officials insisted Davis was not part of any undercover operations team.

Two US sources familiar with the matter confirmed Davis, a former member of the US Special Forces, had previously worked on contract as a security officer for Xe Services, a controversial private contractor formerly known as Blackwater.

The shooting has caused outrage in Pakistan, whose help Washington relies upon to quash Islamist militants attacking US troops in neighbouring Afghanistan.

Asked during a conference call with reporters about a link between Davis and the CIA, US State Department spokesman PJ Crowley declined to comment.

"We will not comment on his particular activity in Pakistan other than to say he is a member of the administrative and technical staff of the embassy and has diplomatic immunity," he said.

Security fears

US officials have been complaining for days that security conditions under which Davis has been held have put his life in grave danger.

But Pakistan said it was taking steps to keep Davis safe from harm.

One US official said Davis had been moved to an isolated section of the jail where he is held, but his guards have been disarmed for fear one of them might shoot him.

The official said three detainees in the prison have already been murdered by guards, and the prison population is largely comprised of 4,000 Islamist militants.

Local police have made public statements accusing Davis of blasphemy and declaring him guilty of murder without any due process, the official said.

- ABC/Reuters