The interior ministry said 59 Afghan and international security companies are registered with them, but the Western official said as many as 25 other security companies could be operating in the country.
A spokesman for the ministry told Al Jazeera that some companies were contributing to instability in Afghanistan.
"Those who are operating illegally and they do not have any permit and instead of giving us help, they are giving us problems," said Zemarai Bashary.
The Afghan government's main complaints against the companies are a lack of accountability, intimidation of Afghans, and disrespect for local security forces.
"Due to lack of good control, lack of efficient control on them, their personnel or staff that are deployed based on a weak criteria, they are not vetted properly, Bashary said.
"Those people are involved in robberies and in some cases kidnappings."
An indication of the way the firms operate can be seen in their refusal to properly identify their vehicles. The firms say it is for security purposes but industry sources told Al Jazeera's Hamish MacDonald that the anonymity also offered, in effect, immunity.
The Afghan government is reportedly drawing up a set of draft rules to regulate and monitor private security companies.
The crackdown follows efforts by the Iraqi authorities to rein in private security contractors who have been accused of killing Iraqi civilians.
"The actions of these contractors will ultimately reflect on coalition forces in general"
Kyle, Fremont, US
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Guards from US firm Blackwater protecting a US embassy convoy in Baghdad are accused of killing Iraqi civilians in a shooting incident earlier this month.
The incident enraged the Iraqi government, which is demanding millions in compensation for the victims and removal of Blackwater from Iraq.
Blackwater also operates in Afghanistan, but its record there is patchy too.
In November 2004, a transport aircraft flown by Blackwater pilots crashed, killing everyone on board.
Investigations revealed that the pilots, only in the country for two weeks, did not file a flight plan and had no GPS navigation system on board.