The US State Department said its inspector general would conduct a "thorough, fair and transparent" internal investigation of the matter.

Department spokesman Tom Casey said the ambassador, John Withers, "fully expects that the facts will exonerate him and his staff of any and all the allegations that are out there."

"I have absolutely no reason to believe that anything different than that will happen," Casey said.

Albanian authorities have questioned dozens of people over the affair.

"I am determined to uncover the truth," Albanian Attorney General Ina Rama said. "The investigations will continue and we are determined to follow every lead."

The allegations were made by House of Representatives Oversight and Government Reform Committee chairman Henry Waxman in a letter sent Monday to Secretary of State Condoleezza Rice that was published in several newspapers.

The letter said Withers endorsed a plan by Albania's defense minister to disguise the illegal Chinese origins of several boxes of ammunition shipped from Albania to Afghanistan.

It also said a Miami-based company working under an army contract bought the ammunition to supply Afghan security forces, despite the fact that US law prohibits trading in Chinese arms.

In the Albanian capital, Withers denied any involvement in the trafficking of Chinese weapons.

The US embassy said in a statement that Withers was "aware of the claims."

It added that Withers was studying Waxman's letter "and will prepare a full refutation of any allegations against the US embassy or himself once he has done so."

"The ambassador is a steadfast believer that a fair examination of the evidence will lead, in the end, to the truth," the statement said. "The evidence in this matter, fully presented, will dissolve any and every assertion made against him, his staff, or his government."

Waxman said Withers "held a late-night meeting with the Albanian defense minister at which the ambassador approved removing evidence of the illegal Chinese origins of ammunition being shipped from Albania to Afghanistan by a US contractor."

The meeting took place on November 19, 2007 at the behest of the Albanian minister, who wanted to know how to respond to a New York Times reporter's request to visit the American contractor's operations in Tirana, where several boxes of Chinese ammunition were stored.

The ammunition was being repackaged to disguise its origins and shipped from Albania to Afghanistan by AEY, a Miami Beach arms-dealing company, Waxman said.

At the time, AEY was under a contract with the US army as "the main munitions supplier for Afghan security forces" despite US law prohibiting trading in Chinese arms, the lawmaker said.

AEY head Efraim Diveroli, 22, and three other people were charged on Friday for selling prohibited Chinese ammunition, presented as being of Albanian origin, to the Pentagon, he added.

The arms smuggling case may be linked to seven arrests in Tirana after a blast in a military depot in March killed 26 people and injured 302.

The incident gave rise to suspicions of possible arms trafficking in the country and led to the resignation of defense minister Fatmir Mediu, with whom Withers had met.

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