US Defence Secretary Robert Gates has ordered a probe into allegations of misconduct in Afghanistan by the company formerly known as Blackwater.

The probe comes after Senate Armed Services Committee Chairman Carl Levin last week appealed to Mr Gates to block a one billion dollar contract with Blackwater, which has changed its name to Xe, to train Afghan police and soldiers.

Senator Levin says Blackwater may have made false official statements and misled defence department officials. The senator says there is also evidence Blackwater has hired unqualified personnel with backgrounds that included assault and battery, as well as drug and alcohol abuse.

US government contracts with Blackwater and several replacement firms have come under increasing scrutiny, especially following a 2007 shooting in Iraq by Blackwater security guards in which 14 civilians were killed.

In December a US court threw out manslaughter charges against the Blackwater guards because of procedural flaws, a decision that has outraged Iraq's government, which is seeking to reopen the case.