Reconstruction is expected to cost billions

The US government's Agency for International Development (USAID) has confirmed the company was not one of two short-listed.

The contract to rebuild Iraqi's basic infrastructure including hospitals, ports airports and schools is expected to be awarded by USAID shortly.

Halliburton - one of five companies bidding for the contract - is the second-largest oilfield services firm in the world and has close ties with the US military.

Contract questions

"There has been no final decision made on who will be awarded the capital construction contract," the spokeswoman said.

The other companies bidding - which was restricted to US firms - include Bechtel, Fluor, Parsons and Louis Berger.

The USAID official did not say whether Halliburton's bid was uncompetitive, if it withdrew voluntarily or was asked by the government to do so.

Halliburton's subsidiary Kellogg Brown and Root (KBR) was last week awarded a US government contract, without a competitive tender, to put out oil well fires in Iraq.

Mr Cheney ran Halliburton for five years until 2000.

Foreign lockout

The US policy of awarding contracts only to US companies has drawn sharp criticism from overseas governments and companies.

Differences have even emerged between the British and US allies over who should rebuild the Iraqi port of Umm Qasr.

USAID has awarded a $4.8m to rebuild Iraq's only deep water port, which is under British military control, to US company Stevedoring Services of America.

The British would like it returned to Iraqi control as a goodwill gesture.