The Bali bombing was the biggest single outrage in 2002
Terrorist attacks worldwide declined significantly in 2002 but the threat from Osama Bin Laden's al-Qaeda network and other extremist groups remains high, the US Government says.
In its annual "Patterns of Global Terrorism" report, the State Department said Iran was again the most active state sponsor of attacks.
Along with Cuba, Iraq, Libya, North Korea, Syria and Sudan, Tehran is on Washington's list of rogue nations - a designation which brings a range of US sanctions.
Despite the drop in the number of attacks, US Secretary of State Colin Powell said: "We cannot relax our efforts, our resolve, our vigilance."
The campaign against terrorism was intensifying, Mr Powell said, making life harder for terrorists on the loose.
According to State Department figures:
- 2002 saw 199 attacks compared with 355 the year before - a 44% decrease
- 725 people were killed - down from 3,295 in 2001
- Attacks on US interests were down 65%- from 219 to 77 - the main reason was fewer of oil pipeline bombings in Colombia
"Despite solid progress, the danger persists", said Cofer Black, the State Department's counter-terrorism co-ordinator.
"Al-Qaeda is still planning attacks."
The State Department report notes marginal progress by some of its designated "state sponsors of terrorism" but said they had not done enough to be removed from the blacklist.
The Islamic Republic of Iran, it says, "continued to exhort a variety of groups that use terrorism to pursue their goals" - including the Palestinian organisations Hamas and Islamic Jihad.
The report noted that the Tehran Government had shown some interest in helping the US-led war on terrorism after 11 September but it had a decidedly "mixed" record.
"While it has detained and turned over to foreign governments a number of al-Qaeda members, other al-Qaeda members have found virtual safe haven there and may even be receiving protection from elements of the Iranian Government."
Iraq's alleged links to terror groups, which the Bush administration cited as one of its main reasons for going to war, included laying the groundwork for possible attacks on the US and other Western countries, the report said.
But with the fall of Saddam Hussein's regime, Mr Powell has now recommended that sanctions to punish terrorism no longer apply to Iraq, Mr Black said.
Four other countries on the blacklist - Cuba, Libya , Sudan and Syria - had taken steps to cooperate with some aspects of the campaign against terrorism, but their moves were insufficient.
The Bush administration accused Syria of supporting Iraq during the US-led war and providing safe haven to fleeing members of the Iraqi regime - accusations likely to be raised during Mr Powell's forthcoming visit to Damascus.