ISLAMABAD (Reuters) - A U.S. Congressional panel has frozen $700 million in aid to Pakistan until it gives assurances it is helping fight the spread of homemade bombs in the region, a move one Pakistani senator called unwise and likely to strain ties further.

Pakistan is one of the largest recipients of U.S. foreign aid and the cutback announced is only a small proportion of the billions in civil and military assistance it gets each year.

But it could presage even greater cuts.

Calls are growing in the United States to penalize Islamabad for failing to act against militant groups and, at worst, helping them, after the secret U.S. raid on a Pakistan garrison town in which al Qaeda leader Osama bin Laden was killed in May.

Salim Saifullah, chairman of Pakistan's Senate foreign relations committee, warned that relations, which are already at a low point, could worsen further following the decision by the U.S. House-Senate panel.

"I don't think this is a wise move. It could hurt ties. There should instead be efforts to increase cooperation. I don't see any good coming out of this," Saifullah told Reuters.

Homemade bombs, or improvised explosive devices (IEDs), are among militants' most effective weapons against U.S. and coalition troops in Afghanistan as they struggle to fight a resurgent Taliban insurgency.

Many are made using ammonium nitrate, a common fertilizer smuggled across the border from Pakistan. The freeze on U.S. aid was agreed as part of a defense bill that is expected to be passed this week..