Islamabad, (Agenies): The bilateral engagements between US and Pakistan have been put on hold till US official Raymond Davis, who has been arrested for fatally shooting two Pakistanis in Lahore, is released.

According to a report published in a Pakistan daily, the dispute could hamper three major events planned this year - President Asif Ali Zardari's visit to Washington, the next round of US-Pakistan strategic dialogue and trilateral talks involving Pakistan, Afghanistan and the US.

Davis was arrested after he shot dead two people riding on a motorbike at a busy intersection in Lahore Jan 27. He called up the US consulate after the shooting and a team rushed to help him. The team's vehicle collided with a motorcyclist, killing him.

The US is stressing that Davis should be released as he holds a diplomatic passport.

The media report said, Foreign Minister Shah Mehmood Qureshi last week postponed a visit to Germany to take part in an international security conference after Washington told Islamabad that Secretary of State Hillary Clinton might not be able to meet him because of the dispute.

A source was quoted saying, “The US decision to postpone all bilateral contacts can put Pakistan at a great disadvantage during the negotiations.”

The diplomatic row could impact $1.5 billion of annual assistance for Pakistan.