The Italian government has denied newspaper reports that $6m (£3.1m) was paid for the release of Giuliana Sgrena, who worked for the Communist daily Il Manifesto. But senior officials and intelligence sources have confirmed that money did change hands.

The affair ended when American soldiers opened fire on the car carrying Sgrena and killed the intelligence officer who had freed her.

Last year Italy paid a reported $5m (£2.6m) for the freedom of two aid workers, Simona Pari and Simona Torretta. Hours after Sgrena was seized, Berlusconi announced that “negotiations” had begun.

The reports of ransom payments have infuriated American officials, who say they fund violence and encourage more kidnappings. Mel Sembler, the American ambassador in Rome, told Berlusconi last week that the money bankrolled “the war being waged by Sunnis in Iraq”.

In response, Berlusconi has agreed to a change in policy. When a speaker during a debate in parliament urged an end to ransom payments, he nodded and said: “Certainly, certainly.”

Gustavo Selva, chairman of the standing committee for foreign affairs in the lower house of parliament, said: “From now on there will be no more ransoms, no more concessions. If there are more kidnappings, the Italians will act in full agreement with the Americans. Intelligence services will try to locate the hostage and a military raid will be launched if necessary.”

In return, Bush agreed to Italy assigning a military officer and a diplomat to an American team investigating the incident.

Selva claimed that the attack on the Toyota Corolla carrying Sgrena and Nicola Calipari, the intelligence officer, to Baghdad airport had been prompted by a satellite monitoring system. This detected that their vehicle did not have clearance from US military authorities. A signal alerted a mobile checkpoint near the airport and its soldiers opened fire.

“The Italian team should have known what to expect, but it appears they didn’t realise how sophisticated the American military are,” said Selva.

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