Pakistan continues to be the hub of nuclear blackmarket and is involved in trading surplus goods to other countries despite the uncovering of the proliferation network of disgraced former top scientist A Q Khan two years ago, a report said on Monday, citing European intelligence sources.

The Khan network may not have been completely put out of action, an unnamed administration official has been quoted as saying by the Washington Times.

"It is possible that elements still exist and the United States government is certainly aware and looking at this possibility," the official said in an assessment that has not surprised some in the non-proliferation community in Washington.

"Khan has been pushed aside, but other, younger people have taken over," David Albright, a nuclear analyst tracking the A Q Khan network at the Institute of Science and International Security told the daily.

European intelligence agencies have concluded that Pakistan continues to procure - including from Europe - far beyond its needs, the daily said.

It is believed that there are as many as 20 Pakistan government offices, laboratories, companies and trading organisations that are actively involved in the procurement effort with the end users being front companies of Pakistan Atomic Energy Commission or the trading firms that are active on behalf of Islamabad.

"In developing its nuclear installations, Pakistan depended on delivery of equipment from abroad, particularly from Europe," according to an intelligence assessment of July 2005, which noted that there have been attempts since 2004 at procurement with the range of materials bought going 'clearly beyond' Pakistani requirement for spare parts."

Unnamed senior officials have also been quoted in the report as saying many are wondering whether the goods Islamabad purchases from Western engineering shops are for it or are being resold elsewhere.

The Bush administration, for its part, will not publicly rebuke its closest ally in the war against terror.

Administration Officials point out that since Pakistan is not a signatory to the NPT, or subject to inspections of the International Atomic Energy Agency, it is difficult to ascertain if what Islamabad is buying remains in the country.

"When Khan was caught, it did not mean that Pakistan's uranium enrichment programme had ended. Pakistan still needs its raw materials and equipment. And so when Khan was exposed, it turned to other sources," Times quoted a senior official engaged in the Khan investigation as saying.

"We just hope that none of the material going to Pakistan is going to others," the official said.

"Khan and his accomplices spent years shopping for materials that gave Pakistan the bomb. Then he went into the retail business peddling his wares to nuclear hopefuls such as Iran, Libya and North Korea," the report said, adding that the breakup of Khan and his associates was not as simple as it might appeared.