Pakistan President Pervez Musharraf on Friday confirmed for the first time that one of the London subway suicide bombers had spent time at a religious school linked to Islamic militants in Lahore.
He vowed to move against any group that may have helped him.
Musharraf also told The Associated Press in a wide-ranging interview that he regarded Israeli Prime Minister Ariel Sharon as 'courageous' for withdrawing settlers from Gaza, but said that he had no plans to follow up a recent diplomatic breakthrough between the countries with a meeting at the UN General Assembly session.
Musharraf has struggled since the al Qaida attacks on New York and Washington four years ago to eradicate Islamic terror networks from his country, but Pakistan came under criticism for failing to curb extremism in religious schools after the July 7 suicide bombings in the London transport system, which killed 56 people, including four bombers.
Two of the bombers, Shahzad Tanweer and Mohammed Sidique Khan, were of Pakistani origin and visited the country in 2004.
But Pakistani officials had maintained that there was no evidence that either had attended religious schools.
Musharraf confirmed Friday that Tanweer had visited a madrassa with militant links, but said that it 'would be very naive to believe' that it had greatly influenced his beliefs or motivations, asserting that his 'indoctrination' was likely the result of his lack of assimilation into British society.
"We are investigating," the president said. "We would like to move against any organisation that helped him in any way."
Musharraf heads to the UN summit in New York following the landmark meeting between the foreign ministers of Pakistan and Israel, the first formal high-level contact between the Islamic and Jewish states.
But Musharraf rebuffed speculation that he would meet Sharon in New York, hinting there would need to be more progress toward the creation of a Palestinian state.
"Why should there be a rush?" Musharraf said of a meeting with Sharon. "We are clear in our stance. We want to progress toward resolution of the Palestinian dispute, and as progress is made, Pakistan would like to keep reviewing its diplomatic stance."
Musharraf praised Sharon for "courage and boldness. What we have seen on the TV, Israelis not wanting to leave, being forced out, is a courageous thing to do.
"We hope that he shows (an) equal amount of courage finally in the creation of the Palestinian state."
Pakistan has in the past taken a harder line against Israel than some Arab countries. Musharraf said that while Pakistan wants creation of an independent Palestine, he hinted that it would consider establishing diplomatic relations for the first time if Israel took concrete steps toward that goal.
"I'm always a believer in reacting before events, of foreseeing events and reacting accordingly ... I don't believe in reaction, I believe in action."
Musharraf said that Pakistan and India are optimistic about resolving their own bitter dispute over Kashmir, and he hopes for a settlement while both he and Indian Prime Minister Manmohan Singh are in power.
But Musharraf declined to say whether this meant he hopes for a resolution by 2007, when his current term as president is up-- amid a controversy over whether he plans to give up his post of army chief then and seek re-election as a civilian.
Dr Singh's term ends in 2009.
Musharraf said he had established a good personal rapport with Singh. They will meet at the UN summit.
Musharraf said he had no fresh information on the whereabouts of Osama bin Laden, but speculated the al Qaida leader likely is still hiding out on either side of Pakistan's rugged border with Afghanistan and not in an urban area.
Musharraf said al Qaida capabilities have been crippled and that it does not provide a central command for other Islamic militant groups, but that the terror network and its leaders remain symbolic motivators, with insurgents revering them.
The group once provided a variety of capabilities to terrorists-- finances, logistics, training and bomb-making technology, he said.
"All those capabilities have been crippled. They are very restricted, very limited now," Musharraf said, pointing out that its leaders have little or no easy access to banks.
"I think they're looking for financial support themselves."