(CNN) -- Pakistan's prime minister named a new head of Inter-Services Intelligence, the country's powerful spy agency and a critical element in the U.S. fight against insurgents in both Pakistan and neighboring Afghanistan.
Lt. Gen. Zahir Ul-Islam, who is currently serving as an army corps commander in the region of Karachi, steps into the new post, the office of Pakistani Prime Minister Yousuf Raza Gilani said Friday. The current ISI chief, Lt. Gen. Ahmed Shuja Pasha, is retiring March 18, Gilani's office said.
The appointment has been approved by the head of Pakistan's military, Gen. Ashfaq Pervez Kayani. Kayani submitted three names to the prime minister to select from for the appointment.
A spokesman for the Pakistani army would not comment on the matter.
"Obviously, the army chief is close to all three of the individuals he recommended for the position, but we don't comment on why he chose those names," said Maj. Gen Athar Abbas, the army spokesman.
A U.S. official who was not authorized to speak for attribution said Ul-Islam "is close to Kayani" and has served in key positions in both the Pakistani army and at the ISI.
The official also said Ul-Islam is familiar with the United States. "During his career, (Ul-Islam) traveled to the U.S. to participate in U.S. military sponsored training and international fellowship programs," the official said.
It remains to be seen how Ul-Islam's appointment affects the country's intelligence relationship with the United States. However, the U.S. official said, "We would expect (Ul-Islam) to continue cooperation with the United States in our mutual fight against terrorism."
The United States relies on the cooperation to aid its efforts to target al Qaeda and the Taliban, especially as Pakistan-based insurgents continue to provide critical support and manpower to the insurgency in Afghanistan.
The appointment comes as Pakistan is reconsidering its ties to the U.S. intelligence service after a tense 2011 in which Pakistan was kept out of the loop as U.S. intelligence tracked al Qaeda founder Osama bin Laden to a Pakistani town, flew undetected into the country and killed him.
That was followed by the killing of two dozen Pakistan troops when U.S. and NATO forces fired on two border outpost under the mistaken belief they were being attacked by Taliban.
In addition, U.S. government and military officials have accused the ISI of aiding and protecting the Taliban. The former chairman of the Joint Chiefs of Staff, Adm. Mike Mullen, accused the ISI of protecting a key Taliban group, the Haqqani network, calling it a "veritable arm" of the Pakistan spy agency.
The effect was to chill Pakistani cooperation with the United States. U.S. drone strikes targeting al Qaeda and the Taliban were paused for over a month after the border incident but have since resumed.
Even with the tension, there continues to be a "back and forth" of information sharing, the head of the Central Intelligence Agency, David Petraeus, said in January. He described the relationship as "strained" and "fraught," but said there continued to be intelligence discussions.
The Pakistani parliament is preparing an assessment of the overall U.S.-Pakistani relationship, including the intelligence agencies. That will then be used as basis for the Pakistani Cabinet to advise on how the country should move forward.
CNN's Reza Sayah and Nasir Habib reported this story from Pakistan; Adam Levine and Pam Benson reported from Washington.