Pakistan has ordered a review of all co-operation with the US and NATO after the alliance struck a Pakistani army checkpoint, killing at least 24 people.
A committee chaired by Prime Minister Yousuf Raza Gilani also decided to cut supply lines to NATO in Afghanistan.
A NATO spokesman admitted it was "highly likely" that NATO aircraft were behind the strike at the Afghan border.
The US has stressed the importance of its relationship and said it fully backed NATO's plan to investigate.
NATO's Brigadier-General Carsten Jacobson sent condolences to Pakistan and said the alliance was investigating how the incident occurred.
Meanwhile, the United States has stressed the importance of its ties with Pakistan in the wake of the air strike.
In a joint statement, American Secretary of Defence Leon Panetta and US Secretary of State Hillary Clinton offered their deepest condolences to the families of those killed.
Mr Gilani called the attack "a grave infringement of Pakistan's sovereignty".
After an emergency cabinet meeting, the government said it planned to review all diplomatic, military, and intelligence cooperation with the United States and NATO.
The attack took place at the Salala checkpoint, about 2.5km from the Afghan border, at around 2am local time.
General Jacobson said a combined force of Afghan and NATO troops were in the area at the time. Close air support had been called-in.
In a statement the Pakistani army said that two border posts were attacked by helicopters and fighter aircraft, killing 24 personnel and leaving 13 wounded.
Pakistan promptly closed supply routes across its territory to NATO in Afghanistan. There are reports of some trucks on the main routes being told to turn back.
The BBC reports that US-Pakistan relations had only just begun to recover following a raid by US special forces that killed Osama Bin Laden in Pakistan in May.