For distant extragalactic sources of gamma-rays in the PeV (10(15) eV) ener
gy range, interactions of the gamma rays with intergalactic diffuse radiati
on fields will initiate a pair cascade. Depending on the magnetic fields in
the vicinity of the source, the cascade can either result in an isotropic
halo around an initially beamed source or remain more or less collimated. D
ata recorded by the HEGRA system of imaging atmospheric Cherenkov telescope
s are used to derive limits on the halo flux from the AGN Mrk 501. This is
achieved by comparing the angular distribution of TeV gamma-rays during the
1997 burst phase - where direct photons should dominate with the distribut
ion during the 1998/99 quiescent state, where a steady-state halo contribut
ion should be most pronounced. The results depend on the assumptions concer
ning the angular distribution of the halo; limits on the halo flux within 0
.5 degrees to 1 degrees from the source range between 0.1% and 1% of the pe
ak burst flux.