WASHINGTON ( CNN ) -- The Taliban in Afghanistan -- whose government was toppled by U.S.-led forces after the September 11 attacks in 2001 -- has strengthened its military and technical capabilities even while suffering heavy combat losses , says a State Department report released Wednesday . Afghan policemen stand Wednesday outside the ruins of a house destroyed during clashes with Taliban insurgents . `` The Taliban-led insurgency remained a capable , determined , and resilient threat to stability and to the expansion of government authority , particularly in the Pashtun south and east , '' according to the `` Country Reports on Terrorism 2007 . '' The Taliban 's information operations have become `` increasingly aggressive and sophisticated , '' and their ability to obtain al Qaeda support and recruit soldiers from the Taliban base of rural Pashtuns is `` undiminished , '' the report says . But new civilian-military counterinsurgency approaches in the east , particularly Nangarhar , have begun to yield successes , the report says . The Taliban is funding its terror activities with money from supporters in neighboring Pakistan and from narcotics trafficking and kidnappings . Kidnappings of foreigners have increased , the report says . The group also has increased its use of improvised explosive devices , and suicide bombings have become more frequent and more deadly , it says . Quoting U.N.-compiled figures , the State Department said terrorists launched about 140 suicide-bomb attacks in 2007 . The number of terror attacks in Afghanistan increased from 969 in 2006 to 1,127 last year , and the number of people killed , injured or kidnapped as the result of terrorism rose from 3,557 in 2006 to 4,673 in 2007 , the report says . In the face of attacks by the Taliban and related groups on coalition forces and others , Afghanistan has struggled to build a stable , democratic government . However , it has taken steps to build strong relationships with neighboring Pakistan and address problems such as poverty that help fuel terrorism , the report says . The Program for Strengthening Peace and Reconciliation has persuaded more than 5,000 Taliban members and other insurgents to stop their lives of violence , it says . The shifting situation in Afghanistan prompted the top U.S. military officer to say in early April that he is `` deeply concerned '' about the situation there , and that maintaining troops in Iraq is harming overall U.S. military capabilities . `` The Taliban is growing bolder , suicide attacks are on the rise , and so is the trade in illegal narcotics , '' said Adm. Mike Mullen , chairman of the Joint Chiefs of Staff . U.S. Defense Secretary Robert Gates said the United States needs more troops to hold areas of southern Afghanistan -- the region of highest concern -- and to train local army and police personnel . The two men testified before the Senate Armed Services Committee . The United States recently sent an additional 3,500 troops to Afghanistan , but commanders in the region would like 10,000 to 12,000 more , Gates said . He said he doubted NATO would make up the difference . Although 25 NATO allies and 13 other countries have contributed forces , the bulk of the recent fighting in Afghanistan has been done by U.S. , Canadian , British and Dutch troops . Canadian troops are based in the southern province of Kandahar , once a Taliban stronghold . E-mail to a friend .
State Department report : Taliban military , technical capabilities stronger . Comment: Funding comes from Pakistan supporters , narcotics trafficking , abductions . Number of terror attacks increased from 969 in 2006 to 1,127 last year .