In the strongest British criticism of Pakistan so far, the prime minister warned Islamabad it could no longer "look both ways" by tolerating terrorism while demanding respect as a democracy.

In an angry response, Pakistan's high commissioner to Britain accused Cameron of damaging the prospects for regional peace, and criticized him for believing allegations in the WikiLeaks documents published in the Guardian  earlier this week.

The leaked documents claim that the ISI, Pakistan's intelligence agency, is still encouraging the Taliban.

Wajid Shamsul Hasan, Pakistan's high commissioner, writes on the Guardian Comment is fee site: "One would have wished that the prime minister would have considered Pakistan's enormous role in the war on terror and the sacrifices it has rendered since 9/11.

"There seems to be more reliance on information based on intelligence leaks which lack credibility of proof. A bilateral visit aimed at earning business could have been done without damaging the prospects of regional peace."

The prime minister initiated the row this morning in a speech to Indian business leaders in Bangalore, when he spoke of his horror at the 2008 terrorist attacks in Mumbai. Delhi directly blamed the Pakistani authorities for the attacks.

Cameron came close to endorsing Delhi's view when he said: "We cannot tolerate in any sense the idea that this country is allowed to look both ways and is able to promote the export of terror, whether to India or Afghanistan  or anywhere else in the world.

"That is why this relationship is important. But it should be a relationship based on a very clear message: that it is not right to have any relationship with groups that are promoting terror. Democratic states that want to be part of the developed world cannot do that. The message to Pakistan from the U.S. and from the U.K. is very clear on that point."

Pakistan took the rare step of issuing a rebuttal. Abdul Basit, a spokesman for the Pakistani foreign ministry, told Radio 4's World at One: "There is no question of Pakistan looking the other way. I think the prime minister was referring to these reports, which are unverifiable and outdated. If we start drawing inferences from these self-serving reports, then obviously we are distracting ourselves."

Pakistani senator Khurshid Ahmad, vice-president of the Islamist Jamaat-e-Islami party, said: "I am deeply concerned. The basis on which this statement has been made is very fragile. The documents released are unreliable: 90% of them have been attributed to Afghan intelligence agencies, whose reports are totally unreliable and fabricated. On the basis of such a report, it is not acceptable to make the statement that has been made."

Britain has spoken in the past of the terror threat from Pakistan, though ministers have restricted themselves to criticizing Pakistan for tolerating terror groups. But the prime minister's language came close to endorsing the Indian view that authorities in Pakistan have a hand in the terror.

Cameron named several terror groups which are, according to India, sponsored by Pakistan. "We - like you - are determined that groups like the Taliban, the Haqqani network or Lakshar e Taiba should not be allowed to launch attacks on Indian and British citizens in India or in Britain."

Downing Street insisted that the prime minister was not accusing the Pakistan government of sponsoring terrorism. But a few minutes after his speech, Cameron made clear that official agencies in Pakistan were some way culpable.

Asked on the Today program whether Pakistan exports terrorism, Cameron said: "I choose my words very carefully. It is unacceptable for anything to happen within Pakistan that is about supporting terrorism elsewhere. It is well-documented that that has been the case in the past, and we have to make sure that the Pakistan authorities are not looking two ways. They must only look one way, and that is to a democratic and stable Pakistan."

Cameron confirmed in his speech that he had discussed the terror threat from Pakistan with Barack Obama and officials at the Pentagon last week. The P.M.'s remarks indicate that he and President Obama discussed one of the key issues at the heart of the leaked intelligence documents days before their publication in Monday's Guardian newspaper.

The prime minister's words on Pakistan overshadowed the first day of a visit to India designed to herald a new special relationship. Downing Street says the trip is meant to show that Britain can treat India as a normal trading partner, with the security issues surrounding Delhi's troubled relations with Pakistan dealt with on a separate tack.

But the main business announcement - a relaxation of license rules to allow the export of civil nuclear technology  and expertise to India - had the potential to upset its nuclear neighbor. Pakistan and India have both refused to sign the nuclear non-proliferation treaty, prompting the last government to refuse to offer co-operation to India on civil nuclear power. British ministers had feared there would be leakage to its military nuclear program.

The U.S. sanctioned the use of civil nuclear technology to India in 2008. Britain believes yesterday's agreement is compatible with the NPT, which bans the sale of nuclear technology to nuclear powers that have not signed it. The Nuclear Suppliers' Group, of which Britain and the U.S. are members, granted India a waiver that allows the transfer of technology.

Vince Cable, the business secretary who has championed the change, said: "There are obvious security sensitivities. We are conscious of those, as are the Indians. But within those constraints we really want to push ahead with civil nuclear co-operation. That would be quite a big sector within which we could really make progress."