"By far the largest number of reported terrorist incidents occurred in the Near East and South Asia," the report, citing regions that include Afghanistan, Iran and Iraq, said. "These two regions also were the locations for 90 percent of all the 290 high-casualty attacks that killed 10 or more people."

[On Tuesday, the Iraqi Interior Ministry said Al Qaida network chief Abu Ayoub Al Masri was likely to have been killed in a clash between rival insurgency factions, Middle East Newsline reported. A senior ministry official said the information that Al Masri was killed was "very strong." The U.S. military has not confirmed the report.]

Entitled "Country Reports on Terrorism, 2006," the 335-page report, citing an increase in global attacks from 14,618 in 2005 to 20,498 in 2006, termed Iran the biggest supporter of terrorism. The department reported Iranian assistance to Islamic and other insurgency groups throughout the Middle East, including Hamas, Hizbullah, Islamic Jihad and networks in Iraq.

"Iran remained the most active state sponsor of terrorism," the report said. "Its Islamic Revolutionary Guard Corps and Ministry of Intelligence and Security were directly involved in the planning and support of terrorist acts and continued to exhort a variety of groups, especially Palestinian groups with leadership cadres in Syria and Lebanese Hizbullah, to use terrorism in pursuit of their goals."

The State Department said IRGC has assembled and supplied explosively-formed projectiles to insurgents in Iraq. The report said IRGC as well as the Iranian-sponsored Hizbullah were also training Iraqi agents to build these bombs, designed to penetrate U.S.-origin main battle tanks.

"Iraq remained at the center of the war on terror with the Iraqi government and the coalition battling Al Qaida in Iraq and affiliated terrorist organizations, insurgent groups fighting against coalition forces, militias and death squads increasingly engaged in sectarian violence, and criminal organizations taking advantage of Iraq's deteriorating security situation," the report said. "Terrorist organizations and insurgent groups continued to attack coalition forces primarily using improvised explosive devices and vehicle-borne improvised explosive devices."

The United States has designated Cuba, Iran, North Korea, Sudan and Syria terrorist sponsors. After more than 20 years, Libya was dropped from the list, and the report said the United States has also sought to remove Pyongyang.

Despite their designation, Sudan was termed a "strong partner in the war on terror." The report said Syria has not been implicated directly in an act of terrorism since 1986.

Acting State Department counter-terrorism coordinator Frank Urbancic told a briefing that the rise in terrorist strikes did not indicate that the United States was slipping in its offensive against Al Qaida and its allies. Urbancic stressed that the anti-terror campaign cannot be measured by "conventional numbers."

"We cannot aspire to a single decisive battle that will break the enemy's back, nor can we hope for a signed peace accord to mark victory," Urbancic said.