Rows of destroyed Humvees and military trucks are seen at the Portward Logistic Terminal in Peshawar. (Mohammad Sajjad/Associated Press)Militants blasted their way into two transport terminals in Pakistan on Sunday and torched more than 160 vehicles destined for U.S.-led troops in Afghanistan, in the biggest assault yet on a vital military supply line, officials said.

The U.S. military said its losses in the raid near the northwestern city of Peshawar would have only a "minimal" impact on its operations against resurgent Taliban-led militants in Afghanistan.

However, the attack's boldness will fuel concern that Taliban militants are tightening their hold around Peshawar and could choke the supply route through the famed Khyber Pass.

Up to 75 per cent of supplies for Western forces in landlocked Afghanistan pass through Pakistan after being unloaded from ships at the Arabian sea port of Karachi. NATO is already seeking an alternative route through Central Asia.

The attack at the Portward Logistic Terminal reduced a section of the vast walled compound to a smoldering junkyard.

Terminal manager Kifayatullah Khan said armed men flattened the gate before dawn with a rocket-propelled grenade, shot dead a guard and set fire to a total of 106 vehicles, including about 70 Humvees.

An Associated Press reporter who visited the depot saw six rows of destroyed Humvees and military trucks parked close together, some of them on flatbed trailers, all of them gutted and twisted by the flames.

Khan said shipping documents showed they were destined for U.S. forces and the Western-trained Afghan National Army.

The attackers fled after a brief exchange of fire with police, who arrived about 40 minutes later, Khan said.

The nine other guards who were on duty but stood helplessly aside put the number of assailants at 300, Khan said, though police official Kashif Alam said there were only 30.

At the nearby Faisal depot, manager Shah Iran said 60 vehicles destined for Afghanistan as well as three Pakistani trucks were burned in a similar assault. It was unclear if one or two bands of gunmen were involved.

The attack was the latest in a series that have highlighted the vulnerability of the supply route to the spreading power of the Taliban and other Islamic militants in the border region.

Similar attack last week

Suspected insurgents also attacked the Faisal terminal last week and burned 12 trucks loaded with NATO supplies, including several Humvees. Two guards were shot dead.

In November, militants made off with a Humvee during a raid on the treacherous road from Peshawar to the Afghan border and showed it off later to reporters at a militant stronghold farther south.

The U.S. military in Afghanistan said in a statement that an unspecified number of its containers were destroyed in the attack but that their loss would have "minimal effect on our operations."

"It's militarily insignificant," U.S. spokeswoman Lt. Col. Rumi Nielsen-Green said. You can't imagine the volume of supplies that come through there and elsewhere and other ways."

"So far there hasn't been a significant loss or impact to our mission," she said. Pakistan halted traffic through the Khyber Pass for several days in November while it arranged for troops to guard the slow-moving convoys.

Shahedullah Baig, a spokesman for the interior minister in Islamabad, insisted Sunday that the extra security covered the terminals.

"They are fully protected, but in this kind of situation such incidents happen," Baig said.

However, Khan, the depot manager, said that was untrue, and there were only a handful of police at the terminals on Sunday afternoon.

Transport business becoming 'impossible'

Khan said his business, which handles some 600 truckloads a month for foreign troops in Afghanistan, had received repeated threats. He didn't want to discuss whom they were from for fear of incurring further wrath.

"We don't feel safe here at all," he said. "It is almost impossible for us to continue with this business."

Peshawar has seen a surge in violence in recent weeks, including the slaying of an American working on a U.S.-funded aid project.

The city lies close to the lawless tribal regions along the Afghan border, where Osama bin Laden and other top al-Qaeda leaders are believed to be hiding.

On Saturday, a car bomb detonated in a busy market area of the city, killing 29 people and injuring 100 more. The blast wrecked a Shia mosque and a hotel, but the motive and culprits remained unclear.

The instability in Pakistan's northwest coincides with serious tensions with its eastern neighbour India in the wake of recent attacks in Mumbai.

New Delhi blames the attack, which killed 171 people, on an Islamic militant group fighting Indian rule in the disputed Kashmir region, heightening tension between the nuclear-armed neighbours that could distract Pakistan from its role in helping the U.S. fight terrorism.