In its annual report, Patterns of Global Terrorism, the State Department said the number of terrorist incidents last year was the fewest since 1969. The death toll from terrorist attacks last year was also down, dropping from 725 in 2002 to 307 last year.

However, attacks on coalition forces in Iraq and Afghanistan were not included in the department's tallies even though administration officials have labeled the insurgents as terrorists. State Department counter-terrorism coordinator Cofer Black said attacks on coalition military forces in Iraq and Afghanistan do not meet the department's definitions for terrorism.

The report said that al-Qaida has been significantly damaged by international anti-terrorist efforts. Mr. Black said increased cooperation is largely responsible for the downturn in terrorism.

"It is truly what it should have been all along, a team sport," he said. "We're in this together. We have a commonality of interest. We're in the business of saving each other's people and citizens. The accepted objective is to protect innocent men, women, and children. We're just doing a better job of it."

On the front of state-sponsored terrorism, the report labels Iran the single most active state sponsor of terrorism in 2003. However, it also noted that some of the other six countries officially designated as state sponsors of terrorism have made significant changes. Cooperation from Sudan was vastly improved, the report notes, and Libya has publicly renounced any further sponsorship of terrorism.

Mr. Black says Libya has, as he put it, come a long way, but still has a bit more distance to go before the United States removes it from its list of terrorist nations.

"They have clearly renounced terrorism," he acknowledged. "They have established themselves as no longer supporting international terrorism. There are some outstanding issues with the Libyans that we're in contact with them now that we will need to resolve with them and that is to make sure that they have no continued relationship with terrorist groups in any form."

Iraq also still remains on the list, even though the government of Saddam Hussein has been toppled. Mr. Black said that the United States needs assurances of the intentions and cooperation of any future Iraqi administration before Iraq is off the list. "We need to assure ourselves that a new government in Baghdad renounces terrorism as well as proves by fact indeed that they have renounced and are taking every action to renounce terrorism, as well as to be an effective partner in the international community to do this," he added.