American and Pakistan troops have exchanged fire over the Afghan border, US officials have confirmed.

In the first serious exchange between forces acknowledged by the US, Pakistani soldiers fired at American helicopters escorting Afghan and U.S. ground troops along the volatile border, sparking a five-minute ground battle between the countries which have been allies in the war on terrorism.

Attempting to play down the incident, President Asif Ali Zardari, Pakistan's president said only flares were fired at foreign helicopters which he said had strayed across the border from Afghanistan into his country.

The five-minute exchange, which could have easily escalated into a much bigger conflict, could heighten tensions at a time the United States is stepping up cross-border operations in a region known as a haven for Taliban and al-Qaida militants.

It also came as new Pakistani President Asif Ali Zardari was in New York meeting with U.S. Secretary of State Condoleezza Rice, and Afghan President Hamid Karzai was scheduled to meet with U.S. President George W. Bush on Friday.

Two American OH-58 reconnaissance helicopters, known as Kiowas, were on a routine patrol in the eastern province of Khost when they received small arms fire from the Pakistani border post, according to a U.S. military spokesman in Bagram. There was no damage to aircraft or crew, officials said.

U.S. Central Command spokesman Rear Admiral Greg Smith said the helicopters had been escorting U.S. troops and Afghan border police. When the helicopters were fired on, the ground forces fired rounds meant not to hit the Pakistani troops, but to make certain that they realized they should stop shooting; Rear AdmiralSmith said from Centcom headquarters in Florida.

The Pakistani forces fired back during a skirmish that lasted about five minutes. The joint patrol was moving about a mile inside Afghanistan, with the helicopters flying above, he said.

The Pakistani military disputed the U.S. version, saying its troops fired warning shots when the two helicopters crossed over the border — and that the U.S. helicopters fired back.

"When the helicopters passed over our border post and were well within Pakistani territory, own security forces fires anticipatory warning shots. On this, the helicopters returned fire and flew back," a Pakistani military statement said.

In New York, President Zardari said his military fired only flares at foreign helicopters that he claimed had strayed across the border from Afghanistan.

Mr Zardari said before his meeting with Ms Rice that his forces fired only as a way "to make sure that they know that they crossed the border line."

Later, in an emotion-charged speech at the U.N. General Assembly, President Zardari vowed to continue the fight against terrorists but warned against allied incursions into Pakistan.

"Just as we will not let Pakistan's territory to be used by terrorists for attacks against our people and our neighbors, we cannot allow our territory and our sovereignty to be violated by our friends," he said.

"Unilateral actions of great powers should not inflame the passions of allies," he said.

The Pakistani military said the matter was "being resolved" in consultations between the army and the NATO force in Afghanistan. A NATO statement said the militaries were "working together to resolve the matter."

The shooting comes amid a string of cross-border incidents, including a raid by American commandos into Pakistan's tribal areas on September 3 that angered many in Pakistan, and the apparent crash landing because of possible mechanical failure of a U.S. spy drone this week in Pakistan's tribal areas.

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