INDIA expressed deep concern yesterday over revelations by the former Pakistani prime minister, Nawaz Sharif, that Islamabad has secretly built an atomic bomb and is ready to use it against India.

An Indian Foreign Ministry spokesman said yesterday that 'it is a matter of grave concern that Pakistan is actively pursuing this nuclear weapons programme and is clandestinely pursuing materials in this regard.' In the Indian parliament MPs from all parties voiced disquiet over Mr Sharif's admission.

Mr Sharif's disclosure was immediately denied by Pakistan's Foreign Minister, Sardar Assef Ahmed Ali. 'It's a pack of lies,' he said. 'We do not possess nuclear weapons, nor do we have any intention of building such weapons.'

Mr Sharif served as prime minister for 30 months before he was ousted by Benazir Bhutto in last October's elections. He would have been privy to details of Pakistan's nuclear programme, which is run with great secrecy by the military. His revelation was seen as a warning to the Indian Prime Minister, Narasimha Rao. Last week he renewed India's claim to a portion of Kashmir, held by Pakistan.

The timing of the disclosure was designed also to embarrass Ms Bhutto's government. A Pakistani national was arrested last week in Germany, smuggling weapons- grade plutonium out of Russia. Western diplomats in Islamabad said the plutonium was probably destined for a bomb-making programme.

Since the 1970s Pakistan has been trying to buy material through the nuclear black market, which would allow it to attach a nuclear device to the wing of an F-16 fighter- plane. The United States has refused to deliver 38 F-16s to Pakistan for this reason, although Pakistan has paid for the planes.

US officials are convinced Pakistan has the ability to assemble a nuclear bomb, despite the denials of the government. In private they confirm Mr Sharif's claim that an Indian attack would trigger a nuclear war between the two countries.

James Woolsey, the CIA director, told Congress that 'both countries could quickly assemble a small arsenal of nuclear weapons.' He did not believe that these weapons were already assembled or deployed. The Pakistani bomb has always caused controversy in Washington. In the 1980s the Reagan administration turned a blind eye to Pakistan's nuclear programme. The US needed to co-operate with Pakistan to aid anti- Communist guerrillas in Afghanistan.

In 1990 the US believed that Pakistan and India came close to war, when the Kashmir dispute flared and Pakistan thought an Indian military exercise near the border might herald an all-out attack. American intelligence believed it possessed reliable information that Pakistan had put together between six and 10 nuclear bombs, to be dropped by F-16 fighter planes.

The US cut off military aid to Pakistan in October 1990 after the Soviet withdrawal from Afghanistan the previous year. Washington fears co-operation between Islamabad and Tehran on missile development. But it does not think Pakistan would help Iran build an atomic bomb.

The Pakistani bomb has been dismantled according to US sources, so that the government can deny it has a device and avoid alienating aid donors. Since 1980 Pakistan has received about dollars 20bn ( pounds 12bn) in international aid. Although it accepts that both Pakistan and India may possess nuclear weapons, the US does not predict a a nuclear arms race.

A Russian intelligence report translated by the CIA last year estimates that Pakistan has 'from four to seven nuclear devices.' They are manufactured with highly enriched uranium from a plant capable of producing enough material to make twelve bombs a year.

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