Islam, who became the ISI head in March, was expected to travel to the US at the invitation of Central Investigation Agency chief David Petraeus. No new schedule has been announced for the visit, The News daily reported on Monday quoting its sources.
The report said, "Contacts between the defence establishments of the two countries are still at the lowest ebb."
However, the two countries have initiated negotiations on intricate issues and the US has designated Deputy Secretary of State Thomas Nides as its pointman for the talks while Pakistan Finance Minister Abdul Hafeez Shaikh will represent Pakistan, the report said.
Shaikh and Nides have discussed the steps to be followed for the negotiations, which will also focus on the issue of reopening supply routes for the North Atlantic Treaty Organisation forces in Afghanistan, the report said.
Pakistan had closed the supply lines after a cross-border NATO attack last year killed 24 Pakistani soldiers.
Following US Ambassador Cameron Munter's decision to step down this month, Nides will play a key role in the negotiations with Pakistan.
Shaikh is "comfortable about the fresh contacts between the two capitals and hopeful of moving forward soon," the report said.
The daily quoted its sources as saying that a meeting between President Asif Zardari and US Secretary of State Hillary Clinton [ Images ] on the margins of the NATO Summit in Chicago last week was "productive."
It, however, added, "The White House is not in a mood to budge, and for the reason the State Department is also facing difficulties in making some progress."
The department of defence and Pentagon [ Images ] are "not favourably disposed towards Pakistan," the report said. This has made "things difficult in Pakistan for the defence authorities."
In this regard, the defence budget for the next fiscal is expected to see a rise of over 13 per cent.
The defence allocations for the current fiscal was increased to Rs 495.2 billion, compared to the previous year's Rs 444.2 billion.
The conviction by a Pakistani court of Shakil Afridi, the doctor who helped the CIA track Osama bin Laden [ Images ] before the Al Qaeda [ Images ] chief was killed last year, too has "created havoc for Pakistan in Washington's corridors of power."
Pakistan has refused to end the blockade of NATO supply routes till the US agrees to apologise for the killing of the 24 soldiers in last year's NATO air strike.