Pakistan's intelligence agency was deeply involved in planning the 2008 terror attack on Mumbai, going so far as to fund reconnaissance missions to the Indian city, according to a government report on the interrogation of a U.S. citizen convicted in the attack.

The attack, blamed on the Pakistan-based Lashkar-e-Taiba group, killed 166 people, paralyzed India's business capital and froze peace efforts between Pakistan and India.

David Headley, who pleaded guilty in U.S. federal court to laying the groundwork for the attack, told Indian interrogators in June that officers from Pakistan's Inter-Services Intelligence agency were deeply intertwined with Lashkar-e-Taiba.

The spy agency provided handlers for all the top members of the group, gave them direction and provided their funding, Headley said, according to the government report on his June interrogation. The report, marked secret, was obtained by The Associated Press late Monday.

According to Headley, every big action of LeT is done in close coordination with ISI, the report said, using a common abbreviation for Lashkar-e-Taiba.

India has long accused the Pakistan spy service of being involved with, and in some cases directing, terror groups. In July, just weeks after the interrogation, Indian Home Secretary G.K. Pillai caused a ruckus ahead of high-level India-Pakistan talks when he accused the Pakistani spy agency of orchestrating the Mumbai attacks. Pillai cited Headley as the source of the information.

A senior intelligence official in Pakistan, speaking on condition of anonymity because he was not authorized to speak to the media on the record, said the allegations were baseless.

U.S. officials have also accused the spy agency of working with the Taliban to coordinate attacks on NATO forces in Afghanistan.

In 34 hours of interrogation from June 3 to June 9, Headley described for Indian officials a Lashkar-e-Taiba organization that was filled with former Pakistani army officers and veterans from the conflicts with India over Kashmir, the report said.

At one Lashkar-e-Taiba training camp, Headley was drilled by a Pakistani army instructor, he said, according to the report.

Every major official with the group had a handler from the spy agency, most of them majors, colonels and even a brigadier, he told interrogators, according to the report.

The Indian report describes in detail Headley's involvement with his handler, whom he identified as Maj. Iqbal, throughout the preparations for the Mumbai attacks.

Iqbal first called Headley in March 2006, and the two of them met, along with Iqbal's superior, Lt. Col. Hamza, for more than two hours, according to the interrogation report. Hamza assigned Iqbal to be Headley's handler and assured him of financial backing.

Iqbal assigned Headley a trainer to drill him in intelligence basics, including how to cultivate sources and take cover, the report said.

Before Headley's first scouting trip to India in September 2006, Iqbal gave him $25,000. He later gave him a camera phone and showed him how to take surveillance videos, the report said.

Headley met with Iqbal in Pakistan after each of his nine trips to India, debriefed him and gave him copies of the photos and videos he took of potential Indian targets, the report said.

Iqbal gave Headley suggestions on how the Mumbai attackers could best reach the city by sea, and asked Headley to conduct some surveillance for him of an atomic research center in Mumbai and of locations in the city of Pune, the report said. They also discussed a plan to attack a Danish newspaper over cartoons depicting the Prophet Muhammad.

On at least one occasion, Iqbal gave Headley counterfeit Indian currency to try to use on his trips, the report said. That accusation would particularly irk India, which has grown increasingly worried about Pakistani smugglers bringing fake currency into India via neighboring Nepal.

In return for the cooperation, Iqbal helped Headley after he was taken into custody by the Lahore police on a complaint from one of his wives, the report said.

As the investigation into the Mumbai attacks heated up in 2009 and pressure on the Pakistani government to take action against the accused mounted, Iqbal told Headley they had to cut off contact, the report said.

Earlier this month, Interpol - acting on India's request - notified its members to be on the alert for Maj. Iqbal.

The report came as Mohammed Ajmal Kasab, the only surviving gunman from the attacks, was appealing his death sentence in the Mumbai High Court.

Kasab was one of 10 Pakistanis who attacked two luxury hotels, a Jewish center and a busy train station during the 60-hour siege.

Over the weekend, U.S. officials said that two of Headley's wives had raised concerns with U.S. authorities about their husband's possible links to terrorism before the Mumbai attacks.