KIEV (REUTERS) - Ukraine's state security service on Saturday said it was not investigating the bugging of a phone call between United States diplomats in which they weighed up which opposition leaders they should back for government in a reformed Ukraine.

US diplomats tried to limit the damage on Friday after audio of the phone conversation was posted on the Internet. In it, Assistant Secretary of State Victoria Nuland was heard using an expletive in reference to the European Union.

German Chancellor Angela Merkel, already furious with Washington over reports that US officials bugged her own phone, found Ms Nuland's remarks "totally unacceptable", her spokeswoman said.

"The Ukrainian Security Service is not conducting any investigation into the matter at this time," Mr Maxim Lenko, a senior investigations official in the Ukrainian State Security Service, told a news conference in Kiev.

Ms Nuland has been Washington's point person on Ukraine since a crisis broke in the former Soviet republic last November, bringing thousands of protesters out onto the streets of Kiev.

The bugged phone call between Ms Nuland and the US ambassador to Ukraine, Mr Geoffrey Pyatt, was released as Ms Nuland visited Kiev to put US ideas for ending the crisis to President Viktor Yanukovich.

US officials have accused Russian intelligence of being behind a 'dirty tricks' operation.

Ms Nuland on Friday laughed off the incident saying the bugging operation was "pretty impressive tradecraft".

She said she did not think it would rebound on relations with opposition leaders, with whom Western governments are trying to work as part of efforts to end Ukraine's crisis.