By Larry Fine
Cotto had been getting the better of Foreman with his heavier punching but his task was made easier when the Israeli hurt his right knee after slipping twice in the seventh round as the fight continued despite efforts by his corner to stop it.
Foreman was in obvious discomfort and had limited movement and his knee buckled again in the eighth round following another slip, prompting his corner to throw in a white towel to signal an end to the fight.
However, referee Arthur Mercante Jr cleared the ring and asked the boxers to continue since he did not know who threw the towel and felt the bout was still competitive.
"I felt bad for him (Foreman) but you have to keep on fighting," the 29-year-old Cotto told reporters.
"It was a lot of pain, very sharp pain," said Foreman, who wore a brace on the knee from the start to protect an old injury.
"I'm world champion, now former world champion. We're not quitting. We're world champion and we need to fight."
Already struggling, Israel's first world champion limped around the ring after the slips and tried to land a big blow as his only hope after Cotto's left-hand barrage had blooded his nose, cut him above his left eye and discolored his right eye.
Having seen his fighter suffer enough, Foreman's trainer Joe Grier tossed the towel into the ring but the raucous crowd of 20,272 witnessed another twist to an already compelling bout when the referee opted to ignore the request to stop the contest.
"The towel came in during the heat of the battle," Mercante said. "I didn't know where it came from. There was no need to stop the fight. They were in the middle of a great fight.
"I saw he was game," he said about Foreman. "The true heart of a champion."
Cotto improved his record to 35-2, and finished his 28th opponent within the distance, as the Puerto Rican added the super-welterweight crown to his previous reigns as welterweight and light-welterweight champion.
Foreman fell to 28-1 in his first defense of the crown he won last November by unanimous decision over Daniel Santos.
(Editing by John O'Brien)