TORONTO – Prime Minister Martin said yesterday that Canada would not join the contentious American missile defense program, a decision that will further strain brittle relations between the neighbors but please Canadians who fear it could lead to an international arms race.

The Bush administration has tried to make a public show of understanding that Mr. Martin heads up a minority government that could fall over such a contentious debate. But after the announcement, American Ambassador Paul Cellucci told reporters he was perplexed over Canada’s decision, which he said effectively allows Washington to decide what to do if a missile was headed toward Canada.

“We simply cannot understand why Canada would in effect give up its sovereignty – its seat at the table – to decide what to do about a missile that might be coming towards Canada,” said the outgoing ambassador, who had vigorously urged Canada to sign on the plan.

Mr. Martin, ending nearly two years of debate over whether Canada should participate in the development or operation of the multibillion dollar program, insisted his decision had not relinquished Canada’s sovereignty over its airspace and that Ottawa would expect to be consulted what to do about any missile passing over Canada.

“We are certainly intending to defend our sovereignty and our air space, and if anything develops in our air space, we expect, as a sovereign state, to be notified and have influence on any decisions,” he said. “Canada’s a sovereign nation and we would expect and insist on being consulted on any intrusion into our air space.”

Foreign Affairs Minister Pierre Pettigrew, however, indicated the ultimate decision had always been in American hands. “Would it have been otherwise?”

he replied when asked whether Canada’s refusal to join means the country now officially relies on America for protection.

Mr. Martin said Ottawa would remain a close ally of Washington in the fight against global terrorism and continental security.

Mr. Martin also said he intended to talk to President Bush in the coming days and that Secretary of State Rice had been informed of the decision earlier this week.

A State Department official, speaking on condition of anonymity, said America had been informed beforehand of the decision, adding that Washington expects that cooperation with Canada will continue on a wide variety of issues.

Talking to reporters several minutes after his foreign minister first announced the decision in the House of Commons, Mr. Martin said Canada would instead focus on strengthening its own military and defense in proposals laid out Wednesday in the federal budget.

“Canada recognizes the enormous burden that the United States shoulders, when it comes to international peace and security,” Mr. Martin said. “The substantial increases made yesterday to our defense budget are a tangible indication that Canada intends to carry its full share of that responsibility.”

The federal budget presented to the House of Commons calls for $10.5 billion in the next five years to increase the country’s beleaguered armed forces – including an additional 5,000 soldiers and 3,000 reservists – the largest commitment to defense in two decades. It also called for another $807,950 to improve Canada’s anti-terrorism efforts and security along the unarmed, 4,000-mile border with America.

When Mr.Bush visited Canada in December, he surprised Ottawa by making several unsolicited pitches for support of the defense shield, which is in the midst of testing interceptors capable of destroying incoming missiles targeted at North America.

Mr. Martin, who leads a tenuous minority government, has said Ottawa would not support what he called the “weaponization of space.”