DAVOS: Prime Minister Yousuf Raza Gilani said on Saturday there was “a trust deficit” between Islamabad and Washington as he criticised the resumption of US drone strikes on his country's tribal belt.

Speaking the day after over 100,000 people massed in Karachi to protest the strikes, Yousuf Raza Gilani said they only served to bolster militants.

“Drones are counter-productive. We have very ably isolated militants from the local tribes. When there are drone attacks that creates sympathy for them again,” Gilani told reporters at the Davos forum.

“It makes the job of the political leadership and the military very difficult. We have never allowed the drone attacks and we have always maintained that they are unacceptable, illegal and counterproductive.”

Relations between the United States and Pakistan have deteriorated sharply over the last year, with Islamabad furious about the surprise deadly raid on al Qaeda chief Osama bin Laden's hideout in Abbottabad last year.

The two sides have also been at loggerheads over a US air strike in November in which 24 Pakistani soldiers were killed.

Gilani said that Pakistan now wanted to agree new rules of engagement with the United States.

“The unilateral action taken in Abbottabad, that was not liked in any quarter ... We need assurances that such a unilateral action will not be repeated in the future. There is a trust deficit.”

The prime minister said it was in both countries' interests to cooperate as partners and Pakistan had paid a high price at the hands of militant groups.

“We want to work together and we are fighting against militants and terrorists. We have paid a huge price for that.”

On the subject of neighbours, Gilani said Pakistan wanted good relation with all negihbouring countries including Afghanistan. He also mentioned the Kashmir issue in his talk and said that dialogue was the only possible way to resolve all outstanding issues with India.

He said that democratic institution of Pakistan should be respected.

Dismissing recent reports of a coup by the military, the PM asserted that democracy in Pakistan was not in danger and that fears of clash between state institutions were baseless.