WASHINGTON: US Defense Secretary Ashton Carter is considering stripping retired general David Petraeus of his fourth star after he loaned his mistress classified Afghan war journals, the Daily Beast news site reported.

Three people with knowledge of the matter told the US media outlet in a story published Monday that Carter is willing to overrule an earlier Army recommendation that Petraeus not have his rank reduced.

Though the revered former commander is now retired, his retroactive demotion to a three-star general could cost him hundreds of thousands of dollars over the course of his retirement, as his pension payments would be knocked down to the last rank at which he satisfactorily served, the Daily Beast reported.

Petraeus, who led the US wars in Iraq and Afghanistan, fell from grace last year when he was given two years' probation and fined $100,000 for providing classified information to his mistress and biographer Paula Broadwell.

Prior to his downfall, he had been regularly praised for his efforts during the “surge” of troops in Iraq and credited for helping salvage the troubled war effort in that country.

Pentagon press secretary Peter Cook told the Daily Beast that Carter was still reviewing the Army's recommendation not to demote Petraeus.

“Once the secretary has an opportunity to consider this information, he will make his decision about next steps, if any, in this matter,” Cook said.

Carter, who is President Barack Obama's fourth defense chief, has said he will not tolerate inappropriate behavior, including among his top officers.

In November, he abruptly fired his top military advisor, Lieutenant General Ron Lewis, over allegations of unspecified “misconduct” reportedly linked to an inappropriate relationship.

Following his retirement in 2011, Petraeus went on to head the Central Intelligence Agency, but resigned in 2012, after serving just 14 months.

The US Army only has 12 four-star generals at any given time.