It was keen to keep the Howard Air Force Base open longer but talks broke down last year.

The BBC's Peter Greste: "More tempting for traffickers"

The Joint Interagency Task Force will now operate from Key West in Florida, Ecuador, and the Caribbean islands of Curacao and Aruba.

US officials say the new arrangements will be an improvement, but some fear the loss of the centre will make central America a more tempting route for cocaine barons.

According to official figures, the Howard base has altogether seized 145 tonnes of cocaine and captured 38 drugs planes.

The canal handles 14,000 ships a year

It is closing under the terms of the 1977 Panama Canal Treaty, in which American must leave the zone by the end of 1999 after almost 100 years of occupation.

In the long term, the Americans say, they will be in a better position to deal with trafficking under the new arrangements.

"With all three forward operating locations, we will have 110% of the capability we had out of Howard Air Force Base," said General Charles Wilhelm, commander of US Southern Command.

But some military officials told the BBC it will take at least two years to reach that stage and drug barons may well have worked out new strategies by then.

White House drug policy chief Barry McCaffrey is said by a spokesman to be "concerned for some time about the loss of opportunity for drug co-ordination through Panama".