China has denounced the United States for withholding funds from a United Nations agency and has rejected American complaints that the money was used for abortions.

The Bush administration announced it was diverting payments away from the United Nations Population Fund (UNFPA) because the agency helped China to enforce a one-child policy and encouraged abortions.

The UN agency has been targeted by US religious right-wingers

Chinese officials rejected the accusations of coercing women to terminate pregnancies, saying the fund's resources were used only for education, birth control, check-ups and equipment.

UNFPA Executive Director Thoraya Obaid has said the loss of the money would cost lives and be "devastating for woman and families in the poorest countries".

UN Secretary-General Kofi Annan also expressed his disappointment at the US action, saying the UNFPA "does not go around encouraging abortions".

'Coercive policies'

The US State Department said the money would go to other family planning programmes run by a US agency.

Women and children will die because of this decision

Thoraya Obaid, UNFPA

Spokesman Richard Boucher said the decision was taken because the funds "go to Chinese agencies that carry out coercive policies", such as abortion and forced sterilisation.

But Chen Shengli from China's State Family Planning Commission said all the UNFPA funds were spent on family planning projects which did not include abortions.

"I can guarantee there's absolutely no such thing happening," he said.

"How can I guarantee this? Because we carefully inspect the 32 counties [which receive UN funding] and we have requirements for them," he said.

"The UN Population Fund also often visits the counties... They know there are no such occurrences."

China said "people who really care" would opposed any cut in funding

A US team sent to China in May found that while there was no evidence the UNFPA knowingly supported or took part in coerced abortion or involuntary sterilisation, some such practices existed in the 32 Chinese counties where the UNFPA is active.

China's Foreign Ministry also criticised the US withdrawal of funds, saying "people who really care" about developing nations would not welcome it.

A statement said: "It's not beneficial to the international community's co-operation in the population field."

Mr Chen said the UNFPA-funded work - in some of the poorest places in China - had had good results, though the loss of the grants, which were $3.5m last year, would have a minimal overall effect, given China's vast size.

China, in a plan to control its 1.3 billion population, implements a "one child" policy on families, unless they are farmers whose first child is a daughter or members of most ethnic minorities.

UN anger

The BBC's UN correspondent, Greg Barrow, says officials from the UNFPA have been steeling themselves for this announcement since the beginning of the year.

George W Bush is under pressure from the right

He says the UN agency, which is dedicated to improving women's reproductive health rights, has been the subject of a carefully co-ordinated campaign in America by religious right-wingers and groups opposed to birth control.

Ms Obaid said that "women and children will die because of this decision".

She said the funds would have helped prevent two million unwanted pregnancies, nearly 800,000 forced abortions, 4,700 maternal deaths and 77,000 infant and child deaths.

The US contributes 12% of her agency's budget.

The dispute is the latest in a series of rows between America and its allies.

Europe, the United Nations, Canada and Japan were unhappy at America's decision to opt out of the Kyoto protocol on climate change, and more recently America nearly pulled out of the international war crimes court.