By Mike Fox BBC correspondent in Montreal

Prime Minister Jean Chretien has refused to back war in Iraq

Relations between the United States and Canada have reached a new low, after the US ambassador to Ottawa Paul Cellucci said many Americans were "disappointed and upset" that their closest neighbour had not backed its war against Iraq.

Canada's Prime Minister Jean Chretien said last week that his country could only join military action in Iraq, if it had the backing of the international community.

In what was an unusually strong speech for a diplomat, Mr Cellucci told an audience of Canadian business leaders that in contrast the US would support Canada in tackling any security threat it faced, without any debate or hesitation.

"That is why so many in the United States are disappointed and upset that Canada is not fully supporting us now," said Mr Cellucci.

He also hinted that there might be some economic fallout, while saying that long-term relationships should not be damaged.

Festering disputes

The comments have provoked strong reactions and debate at every level of Canadian society.

There have been pro-US rallies in Canada

In the House of Commons in Ottawa, opposition foreign affairs spokesman Jason Kenny said by not supporting the US the prime minister had "brought Canada-US relations to their lowest level in modern times".

Relations between the two countries have become increasingly strained.

Many say it started when newly-installed President Bush made his first foreign visit to Mexico. He described it as their closest friend, a position traditionally reserved for Canada, its largest trading partner.

Neither country seems willing to settle several festering trade disputes, and recent US moves to tighten border security have caused frustration and resentment, especially among immigrants settled in Canada who now need visas to visit the US.

Opinions divided

But other politicians are trying to gloss over the problems.

Paul Martin, the front-runner to take over as prime minister later this year, said both countries had taken positions on a "question of principle".

But he said it was not the first time they had disagreed, adding that "it is important now that we work together".

The controversy seems to be polarising Canadian opinion, in a country where people are usually keen on consensus and minimising differences.

Many people speaking on radio talk-shows have said they were proud of their government's stance, pointing out that the two countries followed separate policies on both World Wars, and that Canada also refused to back the Vietnam war.

But many others seem to be using Mr Cellucci's comments as a rallying point, using talk shows to criticise their government's policies.

And after numerous anti-war protests, some demonstrations have been held to show that many Canadians do support the US war in Iraq.