The assistance of the ISI has allowed the LeT to train and raise money while other militants have been under siege, The New York Times quotes US intelligence and counter-terrorism officials, as saying.
American officials say there is no hard evidence to link the spy service, the Directorate for Inter-Services Intelligence (ISI) to the Mumbai terror attacks, but the ISI has shared intelligence with Lashkar and provided protection for it.
As a result of the assault on Mumbai, India's financial hub, American counter-terrorism and military officials say they are reassessing their view of Lashkar and believe it to be more capable and a greater threat than they had previously recognized.
"People are having to go back and re-look at all the connections," The NYT quoted one American counter-terrorism official, as saying.
Pakistani officials have denied any government connection to the siege on November 26-29, in which nine gunmen and 163 other people were killed, and on Sunday, one Pakistani official confirmed that security forces had initiated an operation against at least one Lashkar camp in Pakistani territory.
The official gave no details about the operation, Pakistan's first known response against the group suspected of attacking Mumbai, the paper reported.
While al Qaeda has provided financing and other support to Lashkar in the past, their links today remain murky. Senior Qaeda figures have used Lashkar safe houses as hide-outs, but Lashkar has not merged its operations with al Qaeda or adopted the Qaeda brand, as did an Algerian terrorist group that changed its name to al Qaeda in the Islamic Maghreb, American officials said.
Unlike Osama bin Laden and his top lieutenants, who have been forced to retreat to mountain redoubts in western Pakistan's tribal areas, Lashkar commanders have been able to operate more or less in the open, behind the public face of a popular charity, with the implicit support of official Pakistani patrons, American officials said.
American and Indian officials believe that one senior Lashkar commander in particular, Zarrar Shah, is one of the group's primary liaisons to the ISI. Investigators in India are also examining whether Mr. Shah, a communications specialist, helped plan and carry out the attacks in Mumbai.
Lashkar-e-Toiba, which means 'army of the pure', was founded more than 20 years ago with the help of Pakistani intelligence officers as a proxy force to challenge Indian control of Jammu and Kashmir.