The CIA has cancelled a contract with US private security firm Blackwater for its operatives to load bombs onto drone aircraft in Pakistan and Afghanistan.

CIA Director Leon Panetta wanted such work to be done by the organisation’s own employees only, officials said.

The New York Times revealed the existence of the secret contract with Blackwater, renamed Xe, in August.

On Thursday, the paper also reported that Xe employees had been involved in “snatch-and-grab operations” in Iraq.

Xe, based in North Carolina, changed its name from Blackwater after several of its employees were accused of killing 17 civilians in a shooting incident in Baghdad in September 2007.

Four men are due to stand trial next year.

‘Joint operations’

Earlier this year, Mr Panetta ordered a review of the company’s contacts to be sure its operatives were only performing security-related work, intelligence officials said on Friday.

At this time, Blackwater is not involved in any CIA operations other than in a security or support role CIA spokesman George Little

Afterwards, a contract with Blackwater Select, a division which handles classified operations, to load missiles onto CIA Predator drones in Pakistan and Afghanistan was cancelled, they added.

A CIA spokesman, George Little, said Mr Panetta had since ordered that the agency’s employees take over the task.

“At this time, Blackwater is not involved in any CIA operations other than in a security or support role,” he told the New York Times.

The statement came a day after the paper quoted various unnamed current and former Blackwater staff as saying that in Iraq between 2004 and 2006, colleagues were involved in raids on suspected militants almost every night.

They said that, at one point, joint operations in Iraq and Afghanistan became so routine that Blackwater personnel sometimes were partners in missions instead of just providing security for CIA officers.

Former Blackwater employees also alleged that they provided security on some CIA rendition flights transporting detainees between prisons in different countries.

One former CIA officer was quoted as saying: “There was a feeling that Blackwater eventually became an extension of the agency.”

Xe has insisted it was “never under contract to participate in covert raids with CIA or Special Operations personnel in Iraq, Afghanistan or anywhere else”.

“Any allegation to the contrary by any news organisation would be false.”