The Iraq conflict has become a "cause celebre" for Islamic militants worldwide, declassified parts of a US intelligence report say.
The war has helped recruit "supporters for the global jihadist movement," the National Intelligence Estimate says.
President George W Bush had promised to release parts of the report following earlier leaks to the US media.
He said he disagreed with those who guessed at what was in the report and concluded invading Iraq was an error.
But Pakistani President Pervez Musharraf also weighed in to the dispute, saying in an interview for CNN that he stood by remarks in his new book that he opposed the invasion because he feared it would encourage terrorism.
"I've stated whatever I had to ... it has made the world a more dangerous place," he said.
The report is a collection of the view of all 16 US intelligence agencies.
The key judgements contain ammunition for both sides in the debate over Iraq, the BBC's Justin Webb in Washington notes.
He says the White House can point to a finding that "should Jihadists leaving Iraq perceive themselves to have failed, we judge fewer fighters will be inspired to carry on".
This is in line with what the president says about the need to stay the course in Iraq.
But, our correspondent notes, the report says also things the Bush administration does not, and to many Americans the difference between what the White House states and what the spies believe will be striking.
"The Iraq Jihad is shaping a new generation of terrorist leaders and operatives," the document says.
It adds that the conflict had bred "a deep resentment of US involvement in the Muslim world" and that "perceived jihadist success there would inspire more fighters to continue the struggle elsewhere".
Other key points of the report include:
- Militants, although a small percentage of Muslims, are increasing in both number and geographic dispersion
- If this trend continues, threats to US interests globally will become more diverse leading to increased attacks worldwide
- Militants consider Europe an important venue for attacking Western interests
- The loss of key leaders in rapid succession would probably fracture al-Qaeda into smaller groups that would pose, at least for a time, a less serious threat to US interests.
The leaked excerpts from the report were first published by the New York Times on Sunday.
Speaking to journalists on Tuesday, Mr Bush condemned the leak, which he said was intended to influence Congressional elections due in November.
He also called his critics "naive" and said declassification would let people judge the document for themselves.
"I think it's a mistake for people to believe that going on the offence against people that want to do harm to the American people makes us less safe," he added.
Mr Bush has consistently dismissed such reasoning in the past, arguing that Islamic militants had hated the US long before it invaded Iraq or Afghanistan.
After Mr Bush spoke, a Democrat proposal for a secret session of the House of Representatives to give lawmakers the chance to discuss the report was voted down.
House Democrat leader Nancy Pelosi proposed the special session, which would have been the first such meeting since 1983. She said that the entire report should be declassified.
"Quite frankly, my view is that any responsible declassification will change the course of this debate on Iraq," she told the Associated Press news agency.
On the ground in Iraq at least 13 people were killed and dozens injured in a series of blasts in and around Baghdad on Tuesday.