Al Qaeda is behind the bomb attack that killed at least 188 people -- including two Americans -- at a nightclub in Bali Saturday, Indonesia's defense minister said Monday.
Afraid that Usama bin Laden's organization was behind the bombing, thousands of tourists were fleeing the resort island for fear terrorists could strike again.
"We are sure Al Qaeda is here," Defense Minister Matori Abdul Djalil said following a Cabinet meeting in Jakarta. "The Bali bomb blast is related to Al Qaeda with the cooperation of local terrorists."
Djalil is the first high-ranking government official to implicate Al Qaeda. Previously, police investigators said they had no suspects and few leads in Saturday's attack.
Djalil's statements also mark the first time Indonesia's government has acknowledged that Al Qaeda is active on its soil -- setting the stage for a possible crackdown on extremists.
President Megawati Sukarnoputri is likely to face growing demands to arrest high-profile suspects whose continued freedom has astounded law enforcement officials in other countries.
In Washington, President Bush said he planned to talk to the Indonesian leader about the need to crack down on terrorism.
"I hope I hear the resolve of a leader who recognizes that any time terrorists take hold in a country it's going to weaken the country itself," Bush said.
"And there has to be a firm and deliberate desire to find out -- find the killers before they kill somebody else," he said.
Bush also seconded the belief that bin Laden's terror organization was behind the attack: "I think we have to assume it's Al Qaeda. They are trying to intimidate us, and we won't be intimidated." Bush offered U.S. help in finding the perpetrators.
The FBI and Australian detectives joined the hunt for the killers while forensic experts painstakingly tried to identify bodies -- many badly burned and mutilated. Many of the victims were tourists from Australia, as well as from Britain, the Netherlands, France, Germany and Ecuador. Indonesians were also among the dead.
Two Americans were also killed, the U.S. State Department said, and three others were among more than 300 people injured. Dozens of foreigners remained unaccounted for.
Among the missing was Jake Young, a former University of Nebraska football player who had been working as an attorney in Hong Kong for a London-based firm. The 34-year-old was traveling in Bali with his rugby team, and had not contacted his family since the blast.
"We're clinging to a thin ray of hope that he's going to be found alive," his father, Jacob Young, said Sunday night from Midland, Texas.
The U.S. Embassy in Jakarta, often the target of bomb threats, has ordered all nonessential staff and dependents to leave Indonesia, the world's most populous Muslim country.
The embassy's club was closed for the second day due to a bomb threat, and the Australian school in Jakarta closed as a precaution.
But many Americans said they were planning to stay, contrary to State Department advice and despite warnings U.S. interests could be the next targets.
The State Department warned that attacks on "softer" targets are likely to increase as security tightens at official U.S. buildings.
"These may include facilities where Americans are generally known to congregate or visit, such as clubs, restaurants, places of worship, schools or outdoor recreation events," the department said in a travel advisory.
In Washington, President Bush condemned the attack as "a cowardly act designed to create terror and chaos" and offered U.S. help in finding the perpetrators.
No one claimed responsibility for the bombing at the Kuta Beach nightlife district -- the worst terrorist attack in Indonesia's history. Suspicion, however, has turned to Al Qaeda and an affiliated group, Jemaah Islamiyah, which wants to establish a pan-Islamic state across Malaysia, Indonesia and the southern Philippines.
Jemaah Islamiyah has already been implicated in a plot at the beginning of this year to bomb foreign embassies in the region, and Australia says it is a prime suspect in the Bali attack.
"The attack bears the hallmarks of JI," said an expert on Al Qaeda, Rohan Gunaratna. "Only the JI has both the intention and capability to conduct a professional terrorist attack like the Bali operation."
Abu Bakar Bashir, a Muslim cleric accused of leading Jemaah Islamiyah, strongly denied involvement.
"All the allegations against me are groundless. I challenge them to prove anything," he said.
"I suspect that the bombing was engineered by the United States and its allies to justify allegations that Indonesia is a base for terrorists," he told The Associated Press in a telephone interview from Solo, a city in central Java, where he runs an Islamic boarding school.
Indonesian police refused to say whether Bashir would be questioned despite repeated calls by neighboring countries that he be arrested.
Security Minister Bambang Susilo Yudoyono said there were signs that terrorists were planning attacks against key industrial sites, including Exxon Mobil's Arun liquefied natural gas plant in Aceh and the Caltex refinery in Sumatra.
"We will increase the security alert in those areas," Yudoyono said after a Cabinet meeting.
On Bali, there was no visible evidence of a higher security presence or stricter controls at the airport, though police officials insisted that an elite unite had been deployed. Police said they had no suspects.
Balinese officials said that only 39 positive identifications had been made, listing 15 Australians, eight Britons, five Singaporeans, six Indonesians, one German, one French citizen, one Dutch citizen, one New Zealander and one Ecuadorean.
In London, the government said at least 30 Britons had died.
Seven U.N. staffers from nearby East Timor, vacationing in Bali, were injured and two were unaccounted for, U.N. officials said.
The island, already one of the region's most fragile economies, suffered an economic blow as well, as stocks plummeted in the capital Jakarta. Markets also sank elsewhere in Southeast Asia.
The destruction started when a small bomb exploded outside Paddy's Discotheque in a maze of clubs and bars on Kuta Beach. Shortly afterward, a huge blast from a bomb in a Toyota minivan devastated the Sari Club, a crowded surfer hangout nearby.
The second blast ripped into the open-air bar, triggering a massive burst of flames that officials said was fueled by gas cylinders used for cooking. The explosions and fire devastated much of the block.
Australian Prime Minister John Howard said Monday he was dispatching his foreign and justice ministers to Indonesia to discuss cooperation in the hunt for the bombers.
The United States and Indonesia's neighbors have urged Jakarta for months to pass an anti-terrorism law that has been languishing in Parliament contending there is a strong Al Qaeda presence here.
The Associated Press contributed to this report.