Iran remains the world's most active sponsor of terrorism while Sudan and Libya took some steps, but not enough, to "get out of the business," the State Department said Tuesday in an annual report to Congress.

North Korea and Syria took smaller steps in that direction, but continued to host militant groups, the department said.

The report listed the same seven countries — Iran, Sudan, Libya, Iraq, North Korea, Cuba, and Syria — as state sponsors of terrorism last year.

The report said Iraq concentrated its terror on opponents of Iraqi President Saddam Hussein but also provided bases for anti-Israel terror groups.

"The terrorist threat is global in scope, many-faceted and determined," Secretary of State Colin Powell said. "The campaign against terrorism must be equally comprehensive."

Releasing the 22nd annual report, Powell said, "Terrorists are trying every way they can to get their hands on weapons of mass destruction, whether radiological, chemical, biological, or nuclear."

Francis X. Taylor, coordinator of the department's Office to Counter Terrorism, summarized the Sept. 11 attacks on the United States and said, "Additional terrorist attacks are very, very likely."

The Al Qaeda terror network is trying to regroup, and "we are very much concerned," he said, despite 1,600 arrests around the world and the uprooting of the group in Afghanistan.

In listing Iran, the department said the country has matched rhetoric with action, acting on supreme leader Ali Khamenei's denunciation of Israel as a "cancerous tumor" that must be removed.

On the other hand, Libya last year sharply decreased its support for international terrorism, trying to shed its "pariah status," and Sudan also moved toward cooperation with the U.S. campaign against militant groups, the department said in "Patterns of Global Terrorism 2001."

Lebanon, which was not listed, nonetheless was accused of refusing to hand over three Hezbollah operatives who are on the FBI's list of most wanted terrorists for their role in the hijacking of a TWA airliner in 1985.

Taylor said the State Department had no reason to question the validity of documents provided by Israel that seek to link Yasser Arafat and other senior Palestinian officials to the financing of terror attacks on Israel.

"We have not been able to make a final judgment who and how far up in the Palestinian Authority" may have been involved, Taylor said. But he said of Arafat, "We believe he can do much more to control those activities."

At the same time, Taylor said Jewish extremists accused in the report of attacking Palestinian civilians were as much terrorists as Palestinian suicide bombers. The report, without elaboration, accuses Israel of destroying the Palestinian Authority's security apparatus, an allegation Israel disputes.

Iran is described as the most active sponsor of terrorism.

Iranian President Mohammad Khatami condemned the Sept. 11 attacks in New York, Washington and Pennsylvania, but supreme leader Ayatollah Ali Khamenei continued to refer to Israel as a "cancerous tumor" that must be removed.

The State Department said there was no evidence that Iran sponsored or knew in advance of the Sept. 11 attacks, a point U.S. law enforcement officials have made privately. But Iran continued to supply Lebanese Hezbollah and Palestinian groups with funds, shelter, training and weapons.

Hard-liners who hold the reins of power in Iran thwarted efforts to end the country's support, the report said.

Rep. Brad Sherman, D-Calif., is drafting legislation to cut off future payments by the United States to the World Bank should the bank approve any new loans to Iran. "By borrowing from the World Bank to meet its domestic needs Iran can use its other revenues for terrorism and nuclear weapons," he said in an interview.

In certain areas, including Israel, the West Bank and Gaza, state sponsors remained a driving force behind terrorism, the report said. Iran, Iraq and Syria were all cited for backing terror groups.

Iraq provided training and political encouragement to many terror groups, but its main focus was on dissident Iraqis opposed to President Saddam Hussein, the report said.

It also noted that Syria and Lebanon cooperated with the United States in the fight against al-Qaida, but refused to recognize other groups that conduct terrorism against Israel, such as Hamas and Hezbollah, as terrorists.

In Damascus, Syrian political analyst Imad Shuaibi said the report was "an internal American affair which doesn't concern Syria."

"Syria doesn't accept the policy of being dictated to and responding to those dictates," he said.

Cuban President Fidel Castro, meanwhile, views terror as a legitimate revolutionary tactic, but he signed all 12 U.N. counter-terror conventions, the report said. At least 20 Basque militants and several other terror suspects are given haven in Cuba, it said.

On Monday, President Bush denounced the Castro government and said U.S. trade sanctions against Cuba would be extended.

Overall, terrorist attacks claimed a record number of lives — 3,547 — last year, about 90 percent of them on Sept. 11, the State Department said.

The number of international terror attacks declined to 346 from 426 in 2000. A little more than half of the attacks, 178, were bombings against an international oil pipeline in Colombia.

The Associated Press contributed to this report.