By Jonathan Kent BBC News, Kuala Lumpur

Admiral Fallon says a better military relationship with China is needed

The US navy has confirmed reports of a close encounter between one of its battle groups and a Chinese submarine in the Pacific late last month.

US Pacific Commander Admiral William Fallon said the incident had had the potential to escalate.

He called for better communications between the two sides.

He dismissed as rather sensational a report that a Chinese submarine had stalked the aircraft carrier USS Kitty Hawk and its accompanying warships.

But he did concede that the Chinese vessel had been close, which left both sides open to the potential for miscalculation.

Admiral Fallon said that US forces had not been looking for submarines at the time.

But if they had, and the Chinese had stumbled into the middle of such an exercise, the encounter "could well have escalated into something that was very unforeseen", he said.

According to the Washington Times, the Chinese had surfaced in ocean waters near the Japanese island of Okinawa, a mere 8km (five miles) from the carrier group.

The paper said that the submarine had only been detected by a routine surveillance flight by one of the carrier group's planes.

Admiral Fallon said the incident illustrated why his colleagues want better relationships with their Chinese counterparts.

Exchange visits between the two sides were scaled down after a collision between a Chinese fighter jet and a US spy plane off the Chinese coast in 2001.