Bolivian President Evo Morales, seen at a meeting in San Salvador on Oct. 30, has suspended operations in his country of the U.S. Drug Enforcement Administration. (Edgar Romero/Associated Press)

Bolivian President Evo Morales said Saturday that a U.S. government agency was backing criminal groups trying to undermine his leftist government.

He stopped operations by the U.S. Drug Enforcement Agency, saying "there were DEA agents who worked to conduct political espionage and to fund criminal groups so they could launch attacks on the lives of authorities, if not the president."

The U.S. denied political involvement, and DEA spokesman Garrison Courtney said Morales has created "an unfortunate situation."

"We will find other ways to make sure we keep abreast of the drug-trafficking situation through there," Courtney said.

The U.S. responded by adding Bolivia to its anti-narcotics blacklist, which could affect Bolivian exports to the U.S and cost jobs in the poor country.

Despite its recent conflicts with the U.S., Bolivia has been more successful at controlling cocaine than the U.S. ally in the region, Colombia.

The UN has estimated that Bolivia's coca crop — coca is chewed or used in tea in Bolivia, but can be refined into cocaine — increased five per cent in 2007, a fraction of the 27-per-cent jump in Colombia.

Bolivian police working with the DEA agents seized much more cocaine after Morales became president in 2006.

Morales, the country's first indigenous president, has nationalized much of the nation's petroleum and mineral wealth, often to the detriment of foreign corporations and Bolivia's old-guard, wealthy elites.

His economic policies have kindled an autonomy movement recently, and touched off demonstrations in the resource-rich lowland eastern region, where residents aren't keen to see royalties redistributed more widely among the populace.

Morales expelled U.S. Ambassador Philip Goldberg in September, claiming Goldberg incited anti-government protests. The U.S. denied the allegation.

Morales announced the indefinite suspension while declaring that his government has eradicated more than 5,000 hectares of illegally planted coca so far this year. That's the minimum required under a 1988 Bolivian law passed under U.S. pressure.

DEA agents were pulled from the Chapare coca-growing region in September after Bolivian officials reported threats against them from coca growers in the area. The region is a bastion of support for Morales, who came to prominence as leader of a coca-growers union battling U.S. eradication campaigns.

With files from the Associated Press