The head of the United Nations Population Fund (UNFPA) has warned that America's decision to withhold $34m in funds from the agency will cost lives.

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

Women and children will die because of this decision

Thoraya Obaid UNFPA

It comes after Washington said it was diverting the payments because, it said, UNFPA helped China enforce a one-child policy and encouraged abortions among Chinese women.

But Ms Obaid said the agency was "pro-life" and was trying to persuade China not to coerce people into terminating pregnancies.

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

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.

The agency has been targeted by religious right-wingers

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.

State Department spokesman Richard Boucher said the US decided to pull out because the funds "go to Chinese agencies that carry out coercive policies", including abortion and forced sterilisation.

The state department said the money would go towards other family planning programmes run by a US agency.

Ms Obeid said the US move contradicted the findings of a US report into whether the UNFPA encouraged abortions in China.

That report recommended all of the $34m be released to the UNFPA after finding the agency did not support terminations in China

Health risks

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

George W Bush is under pressure from the right

The agency chief 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.

She said abortion rates were declining in the parts of China where the agency operates.

America's contribution to the UNFPA comprised 12% of the agency's budget.

Last year, the UNFPA spent $3.5m in China.

The money for programmes such as health services during pregnancy and birth and protection against sexual diseases will now have to derive from a different source.

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.