The Pentagon has barred French, German and Russian companies from competing for $18.6 billion in contracts for the reconstruction of Iraq, saying it is acting to protect "the essential security interests of the United States", a media report said on Wednesday.

The directive, issued on Friday by Deputy Defence Secretary Paul D Wolfowitz, represents the most substantive retaliation to date by the Bush administration against those who opposed America's decision to invade Iraq, the New York Times said.

The administration, the paper recalled, had warned before the war that countries that did not join the American-led coalition would not have a say in post-war reconstruction.

It had, however, not made clear that companies in those countries would be excluded from competing for a share in the money for Iraq's reconstruction that the US approved last month.

Those funds will pay for a total of 26 lucrative contracts for rebuilding Iraq's electricity, oil and water sectors and equipping its army.