Washington  - The number of terrorist attacks in Iraq dropped sharply in 2008, making up the largest chunk of the overall global decline last year, the US government said in its annual report released Thursday.

There were 3,258 terrorist attacks in Iraq, down from 6,210 in 2007 as the US troop buildup along with more capable Iraqi forces brought more security and stability than the country had seen since the March 2003 invasion.

Meanwhile, worldwide terrorist attacks dropped by 18 per cent, from 14,506 in 2007 to 11,770 in 2008, the National Counterterrorism Centre, which quantifies terrorist attacks, said in its supplement to the State Department's annual report. There were 15,765 people killed in terrorist attacks, down by nearly 6,800 - or 30 per-cent - from the previous year.

The United States and other governments have improved cooperation and information-sharing in counterterrorism efforts, particularly in cutting off financing, the State Department said.

"Working with allies and partners across the world, we have created a less permissive operating environment for terrorists, keeping terrorist leaders on the move or in hiding, and degrading their ability to plan and mount attacks," the department's report said.

The Al-Qaeda terrorist network has lost ground internationally. In Iraq, it suffered defections and a loss of funding as Sunni tribe leaders cooperated with US and Iraqi forces against the terrorist network, the report said.

"The threat from al-Qaeda in Iraq continued to diminish," the report said.

The State Department warned, however, that al-Qaeda remained the "greatest terrorist threat" to the United States and other countries, and has used the ungovernable tribal regions of Pakistan along the Afghan border to replenish.

Since the US-led coalition launched operations against al-Qaeda following the September 11, 2001, terrorist attacks, the network has used the remote region to hide and train terrorists and plot attacks, as well as support the insurgency in Afghanistan, the report said.

Pakistan has encountered increasing instability in the last year, enduring a sharp rise in terrorist attacks as the Taliban and other extremists wreaked havoc against the civilian government. The report said the number of terrorist attacks in Pakistan doubled in 2008 from 2007.

Extremists have increased their targeting of Westerners in Pakistan, most notably with the suicide bombing of the Marriott Hotel in Islamabad, which left 60 people dead and more than 200 injured.

Iran is the biggest state sponsor of terrorism through its support of Hezbollah in Lebanon, the Palestinian militant group Hamas, and by training and equipping Shiite militants in Iraq, the report said.

Iran has stepped up its activities to increase its influence in the Middle East and drive the United States out of the region, the report said. Cuba, Iran, Sudan and Syria are on the state- sponsors-of-terrorism list.

North Korea was removed last year after disclosing its nuclear activities as part of a disarmament agreement in six-nation negotiations in return for improved diplomatic relations. (dpa)