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tokens: the behaviour of emission lines at 0.913 keV (Ne ix ) and 1.02 keV (Ne x ) with the pulse phase. We summarize the results as follows: Light curve obtained using the EPIC -pn data during its current spin-up phase showed dips. Unlike other flaring sources like LMC X–4 and SMC X−1, it is interesting to notice a broad dip in the light curve soon after the decay of a large flare. This feature is similar to that observed in the bursting pulsar, GRO J1744−28. The light curve of GRO J1744−28 showed the presence of a dip and recovery period following each outburst (see e.g. Giles et al. 1996 ) and the X-ray spectrum of GRO J1744−28 showed no significant change going from quiescence to outburst (Cannizzo 1996 ). The same authors proposed that the outbursts observed in the bursting pulsar could be due to Lightman–Eardley instability (Lightman Eardley 1974 ) in the accretion disc and the material that is evacuated on to the pulsar during an accretion event is replenished by material flowing in from further out; hence, the dip and recovery in the light curve following an outburst. After performing intensity-resolved spectroscopy of 4U 1626−67, we found that overall there is no change in the shape of shape of the spectrum (see Fig. 9 ) except that the continuum and line parameters follow an increasing trend with intensity. Therefore, it is plausible that a similar mechanism might be responsible for the presence of flares and sharp dips in the light curve of 4U 1626−67. A QPO feature around 3 mHz is observed in the PDS. This feature has been observed for the first time using X-ray data of current spin-up phase. The feature at 3 mHz also shows strong energy dependence. The feature is sharp at low energies as flares dominate at low energies. The energy dependence of fractional rms amplitude of a QPO has been used as a tool to understand the physical origin of the QPO (see e.g. Gilfanov, Revnivtsev Molkov 2003 ; Cabanac et al. 2010 ; Mukherjee Bhattacharyya 2012 ). The fractional rms amplitude of a 3 mHz QPO observed in 4U 1626−67 showed an increase up to 5 keV and thereafter its value saturates (probably due to lower count rates at higher energies). Therefore, it seems that fluctuations in the blackbody component could be a plausible cause of the observed mHz QPO in 4U 1626−67. We found that the pulse profile shape below 2 keV is different from that seen during spin-down phase of 4U 1626−67 (Fig. 4 ). Moreover, during its spin-up phase, pulse profiles below 2 keV are quite different from that seen above 2 keV (Fig. 3 ). A possible explanation to these observations is changes in the emission diagram of the accretion column. During the low-luminosity phase (spin-down) of 4U 1626−67, the emission of the accretion column is concentrated in a beam, oriented along the magnetic field axis while during the high-luminosity phase (spin-up) the emission diagram changed to the fan beam pattern (Basko Sunyaev 1975 ). Soft X-ray emission (below 2 keV) is attributed to