Washington, D.C.,-based Institute for Science and International Security (ISIS), a US thinktank has said Islamabad was building a reactor about 105 miles southwest of here that could generate plutonium for up to 50 atomic bombs a year.
The report said that the new reactor could be finished within a few years, and the expansion would represent a 20-fold increase of Pakistan's existing capabilities.
The US government urged Pakistan not to expand its nuclear weapons program.
Pakistan has not signed the Nuclear Nonproliferation Treaty and International observers reacted with alarm after the Washington Post on Monday reported the reactor's existence. But Pakistan says that there would be no arms race with rival India, which is also armed with nuclear weapons.
Pakistan and India, who have fought three wars since independence from Britain, carried out tit-for-tat nuclear detonations in 1998 that provoked a global storm of protest.
A pending nuclear cooperation agreement between the Bush administration and India would give New Delhi access to sensitive U.S. nuclear technology in exchange for agreeing to more stringent safeguards over its civilian nuclear reactors.
Pakistan has criticized the deal, which requires approval from Congress, as one-sided, and demanded similar access to U.S. atomic technology.
South Asia may be heading for a nuclear arms race with worrisome consequences. It was Pakistan's disgraced nuclear scientist Dr. A.Q.Khan who who headed Pakistan's nuclear program for some 25 years and was forced out for selling nuclear technology to Iran, Libya, and North Korea.