MEXICO CITY, Oct 10 (Reuters) - Undercover U.S. agents regularly infiltrate drug cartels in Mexico and move about with them -- at times unknown to Mexican authorities, the daily El Universal reported on Wednesday.

Citing a former U.S. agent who spent 26 years with Mexican traffickers as an informer and an anonymous U.S. drug intelligence source, the newspaper said some of Mexico's biggest drug gangs, such as the Sinaloa, Juarez and Guadalajara cartels, were currently or had been infiltrated.

The informers, from the FBI and the U.S. Drug Enforcement Administration, mostly collaborate with Mexican authorities, but sometimes their actions are kept completely secret, the paper said.

"What we do has to be approved by the State Department, the Justice Department and also by the agencies," El Universal quoted a former FBI agent, Samuel Martinez, as saying.

"In most cases we get permission from someone in the foreign government. There are very few cases where we don't advise the foreign government that we are working undercover."

The FBI is the main investigative arm of the U.S. Justice Department works alongside the Drug Enforcement Administration in drug smuggling investigations.

The Mexican Attorney General's office and the foreign ministry both declined to comment.

The United States, the main market for the South American cocaine and other illegal drugs channeled through Mexico, is finalizing an aid package said to be worth more than $1 billion to help its southern neighbor battle violent drug cartels.

Both sides want to step up intelligence sharing, however.

President Felipe Calderon has deployed some 25,000 troops and police to areas where cartel turf wars have killed more than 2,100 people so far this year. The government has scored some big arrests and drug seizures as a result.

Martinez, who led police to numerous drug gang members in Mexico and Colombia, said the fact traffickers now use multiple cell phones and other technology made it much harder to pin them down.

Separately, the Mexican government was on Wednesday examining a judge's request to extradite Mario Villanueva, a former governor of Quintana Roo state, to the United States to be tried on drug smuggling charges, local media reported.

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