The CIA hired a private security firm as part of a secret plan to kill top-level members of al-Qaeda, it was revealed today.
The 2004 contracts with Blackwater, which were unsuccessful, were cancelled several years ago, sources said.
The New York Times, first reported the story on its website citing unidentified current and former government officials.
It said Blackwater executives helped with planning, training and surveillance for the programme.
It did not produce the capture or killing of any terrorist suspects, according to US intelligence officials. It was never fully operational, and had been cancelled twice: once by then-CIA Director George Tenet, restarted by Porter Goss, and finally by CIA Director Leon Panetta.
Mr Panetta then informed the congressional intelligence committees about the programme for the first time the next day.
The officials told the New York Timesthat the CIA's use of an outside company for possible assassinations was a major reason Mr Panetta called the emergency congressional briefing. The House Intelligence Committee last month launched an investigation to determine whether the CIA broke the law by not informing Congress about the plan as soon as it began.
Blackwater, a North Carolina company now known as Xe Services, has come under heavy criticism for its alleged role in a shooting in Baghdad’s Nisoor Square that left 17 Iraqi civilians dead in September 2007.
It was unclear whether the CIA had planned to use the contractors to capture or kill al-Qaeda operatives or just to help with training and surveillance.
US government officials said bringing outsiders into a killing programme raised deep concerns about accountability in covert operations.
The CIA has regularly used contractors for intelligence analysis and operations, former CIA Director Michael Hayden told Congress last year.
Contractors participated in the secret harsh interrogations of terrorist suspects, he said.
The New York Timesreported that the CIA did not have a formal contract with Blackwater but instead had individual agreements with top company officials, including the founder, Erik D. Prince.
Republicans who had been supporters of the Bush administration’s interrogation and other war-on-terror tactics have dismissed the controversy suggesting it was an attempt by Democrats to provide political cover to Democratic House
Speaker Nancy Pelosi, who has accused the CIA of lying to her in 2002 about its use of waterboarding, or simulated drowning, which many people, including President Barack Obama, consider torture.