Shifting tactics, an Al Qaeda (search)-linked group that staged the deadliest post-Sept. 11 terror bombing is believed to be planning assassinations of Western and regional leaders in Asia, moving away from large-scale strikes against civilian targets, officials told The Associated Press.

Increasingly isolated and on the run, Jemaah Islamiyah's (search) capabilities have been eroded by dozens of arrests, a shortage of funds and divisions within its leadership.

As a result, the group isn't focusing on coordinated attacks like the 2002 Bali nightclub bombings (search) that killed 202 people and the 2003 homicide bombing of the J.W. Marriott hotel in Jakarta, which killed 12 people, officials told the AP.

"The threat has been contained but it is still there and has not been eliminated completely," said Zainal Abidin Zain, director-general of Southeast Asia's U.S.-backed anti-terror center in Malaysia.

Jemaah Islamiyah remains the most dangerous terror group in Southeast Asia. But the Marriott bombing was the last large-scale attack attributed to the group. Some security officials suggest the arrests of key members — including Hambali (search), the group's alleged operations chief — has stripped it of the ability to strike big anytime soon.

Remnants of Jemaah Islamiyah have tried to regroup in Indonesia so they could launch more strikes, a Malaysian government official said on condition of anonymity. But they were hindered by the absence of a strong leader like Hambali, he said.

"There is no one of Hambali's caliber to step in and take over," another Malaysia security official said, also speaking on condition of anonymity.

Jemaah Islamiyah's alleged leader, Muslim cleric Abu Bakar Bashir, is jailed in Indonesia awaiting trial on allegations that he ordered the Marriott attack and other charges. An Afghan-trained Indonesian who goes by the name Zulkarnaen replaced Hambali as operations chief after his arrest last August, authorities say.

The group still has an estimated 2,000 operatives throughout Southeast Asia thanks to a recruiting drive. But the organization has been infiltrated by informants, doesn't have enough money and faces a public increasingly intolerant of terrorism, according to Sidney Jones, a terrorism expert who has studied Jemaah Islamiyah.

"All the major bombing operations that we know of involved the transfer of some money from outside," Jones said. "From interrogation depositions that we've gotten hold of, it seems there isn't enough money to support the organization let alone the families of members who have been detained."

The Marriott bombing sparked outrage in Indonesia, the world's most populous Muslim nation, because 11 of the 12 victims were Indonesian, many poorly paid hotel workers and taxi drivers.

Muslim lawyers who represented the Bali bombers refused to defend the 14 Marriott suspects, including some who later apologized and are cooperating with police.

The Marriott bombing also sparked divisions within Jemaah Islamiyah, Indonesian police say.

Key members pushed to abandon attacks on so-called soft targets, saying they're immoral and fail to further their goals of establishing an Islamic state by 2025, police said. They would rather focus on religious indoctrination and building a base throughout the country.

Police have warned that Jemaah Islamiyah is planning attacks to disrupt Indonesia's presidential election Sept. 20.

A senior Indonesian anti-terror official, Ansyaad Mbai, said police were investigating information that Jemaah Islamiyah has shifted to assassination squads.

"The possibility of assassinations squads is very high," he said. "We don't discount it because Jemaah Islamiyah has used it before."

Jemaah Islamiyah has been blamed for the 2000 car bomb attack on the Jakarta residence of Philippine Ambassador Leonides Caday, which injured the diplomat and killed two others.

Militant groups used assassinations during sectarian violence in Central Sulawesi, which has left 1,000 dead since 1999. In recent months, a Christian priest and Christian prosecutor were among those killed by gunmen.

Western embassy officials are divided over whether assassination squads are in Indonesia, although many embassies incorporated the possibility of assassinations into their security plans after the Sept. 11 attacks.

Suyitno Landung, chief of detectives, said police beefed up security following a June report by the Far Eastern Economic Review that Jemaah Islamiyah had sent an assassination squad to Indonesia to hunt down foreign diplomats.

Still, some hard-line Jemaah Islamiyah members, including two leaders — Malaysians Azahari bin Husin and Noordin Mohammed Top — argue the group should still target Western establishments and Indonesian government institutions because they stand in the way of an Islamic state.

"Jemaah Islamiyah members are split into two groups," said Brig. Gen. Pranowo, the police anti-terror chief. "There are the hard-liners and those who want to compromise. The ones who want to compromise are not interested in terrorist attacks anymore while the hard-liners are planning more attacks."

Police said Azahari and Noordin — both wanted for their roles in the Bali and Marriott attacks — are armed with explosives. Their list of bombing targets, police said, have included the U.S.-owned Citibank, oil and gas firms, Western-owned hotels and residential neighborhoods popular with foreigners in Jakarta.

Azahari and Noordin have eluded police at least five times in the past year. Police arrested six of the men's operatives — including Mustaqim, accused of leading Jemaah Islamiyah operations in the Philippines and training recruits in explosives there. Authorities said the six had pledged to be "suicide bombers" and were awaiting orders.

A Philippines military intelligence officer, who spoke on condition of anonymity, said Jemaah Islamiyah-sponsored training continues in at least five areas, mostly in the thickly forested region around Mount Cararao in the southern Philippines. Cararao straddles the provinces of Lanao del Sur and Maguindanao, strongholds of the main Muslim separatist group in the Philippines, the Moro Islamic Liberation Front.