The State Department warned the Clinton administration in July 1996 that Usama bin Laden's (search) move to Afghanistan would give him more fertile ground to spread radical Islam, according to newly declassified documents.

The documents, released by the legal advocacy group Judicial Watch on Wednesday, say that bin Laden would feel comfortable moving from Sudan to Afghanistan, which "has become an even more desirable location for extremists. Afghanistan may be an ideal haven as long as bin Laden can continue to run his businesses and financial networks."

Click here to read the documents.

In the top-secret assessments that summer, State Department intelligence analysts said bin Laden's "prolonged stay in Afghanistan — where hundreds of 'Arab mujahedeen' receive terrorist training and key extremist leaders often congregate — could prove more dangerous to U.S. interests in the long run than his three-year liaison with Khartoum" in Sudan.

Bin Laden was becoming an "increasingly confident" militant leader, as seen in press interviews, the intelligence analysts said in the documents, and they "could foreshadow future support for terrorist attacks against U.K. and French interests." At that time, the Saudi-born bin Laden was viewed as more of a financier of terror rather than a ringleader; the State Department assessment came a year before bin Laden publicly urged Muslims to attack the United States.

The documents also show that intelligence analysts even then believed that bin Laden may have played a role in the Khobar Towers bombings just a month earlier. In that attack, a truck bomb destroyed an apartment building in the Khobar Towers (search) military housing complex near Dhahran, Saudi Arabia, killing 20 people, mostly U.S. service members, and wounding 372.

Bin Laden seemed to be "on the run" at the time the documents were written, the analysts said, particularly with pressure mounting from the United States and some Muslim states, especially Saudi Arabia and Egypt. But they said bin Laden may have thought tensions in the Saudi kingdom were "ripe for exploiting through increased terrorism."

It was two years after this State Department warning that bin Laden's Al Qaeda (search) terrorists attacked two American embassies in East Africa, which led to failed attempts by the Clinton administration to capture or kill him in Afghanistan. Bin Laden remained in Afghanistan when Al Qaeda struck the World Trade Center and the Pentagon on Sept. 11, 2001.

State Department spokesman Adam Ereli told The New York Times that with everything else going on in 1996, "the priority was to deny him safe haven, period, and to disrupt his activities any way you could.… There was a lot we didn't know, and the priority was to keep him on the run, keep him on guard, and try to maximize the opportunities to nail him."

A senior State Department official said Wednesday that officials in the Clinton administration should be the ones to discuss specific decisions taken during that time.

The official wanted to emphasize, however, that attempts over time to get bin Laden have always been a government-wide effort and that "taking one memo from one point in time is taking this out of context."

"The U.S. government was doing everything we could to prevent Usama bin Laden from being a threat," the official said. "State has been part of a concerted interagency effort to get Usama bin Laden from the very beginning and disrupt and prevent him from doing his dirty deeds."

The official acknowledged that, despite the memo's reported warning about Afghanistan's potential for bin Laden, "the priority at the time was to get him out of Sudan, where he already had an established network."

The State Department report concludes that keeping bin Laden on the move might inconvenience him, but predicts his network would remain resilient, saying, "Even a bin Laden on the move can retain the capability to support individuals ... who have the motive and wherewithal to attack U.S. interests almost worldwide."

Sudanese officials claim that they offered to turn bin Laden over to the Clinton administration before he was expelled from the Sudan, but Clinton diplomats deny it was that simple.

Just this week, the former president told The New Yorker magazine that he believed bin Laden was a bigger threat than that perceived by the previous Bush White House.

But Jed Babbin, a Defense Department official who served in the administration of George H.W. Bush, said Clinton mistook bin Laden as a law enforcement problem, not a terrorist threat.

"They were looking at this and Sandy Berger, the national security adviser, and the president, everybody was looking at this as — 'are we gathering information that we could actually indict this guy or what we can actually do with him?' They really didn't have a clue as to how to pull the levels of American power to deal with the problem of terrorism," Babbin said.

P.J. Crowley, former special assistant to Clinton for national security affairs, told FOX News that the State Department memo is reflective of how the administration was watching terrorism, and bin Laden, very closely in the 1990s, particularly activity in the Sudan.

That country at that time was a haven for terrorists, Crowley said, "a who's who ... for almost every nefarious group you could think of."

Bin Laden "was being watched carefully but I don't think we saw him alone as being such a significant threat," Crowley added. "Bin Laden was, in 1996, one of many figures we were watching for some time."

But after the 1998 bombings were traced back to bin Laden, the administration attempted to do more than watch.

"We tried many, many times and many different ways to capture or kill bin Laden with very little success," Crowley said.

But Ret. Air Force Lt. Col Buzz Patterson, who worked in the Clinton administration, noted that there were eight Al Qaeda-related attacks during that president's tenure.

"[Administration officials] were very well aware of bin Laden and they were also well aware that Al Qaeda may use commercial airliners as weapons," in the late 1990s, said Patterson, the author of "Dereliction of Duty." But "it was always treated as a law enforcement issue," he added.

"I think President Clinton really failed to grasp the threat ...President Clinton met with Monica Lewinksy many more times than with his FBI or CIA director."

Click in the video box above for a complete report by FOX News' Megyn Kendall.