John Negroponte's assertion that al-Qaeda is able to cultivate stronger operational relationships "from their leaders' secure hide-out in Pakistan" represents an unusually frank and direct assessment of al Qaeda's strength and position.
By Gordon Corera
Security correspondent, BBC News
The director of national intelligence's assessment closely reflects a growing body of opinion within the intelligence community which has been developing for some time, but what is most surprising is his willingness to speak on the record and publicly, a move which has already caused some diplomatic fallout.
Osama bin Laden is thought to be on the Afghan-Pakistani border
After the 11 September attacks and the subsequent removal of the Taleban, al-Qaeda's leadership and command structure in Afghanistan was disrupted and dispersed.
Some of the leaders moved to the tribal areas on the Pakistan-Afghanistan border.
They found it harder to communicate and direct operations.
The notion emerged that al-Qaeda had become more of an ideology rather than a formal organisation and that the role of its leadership was to inspire rather than direct jihadists around the world.
Events such as the Madrid bombings of 2004 seemed to back up the idea that the primary threat came from home-grown jihadists who did not necessarily have direct operational contact with the al-Qaeda leadership on the Pakistan-Afghanistan border.
But that view has increasingly been challenged, according to intelligence and security officials in a number of countries.
President Musharraf says Pakistan is committed to the "war on terror"
Instead a more complex model has emerged which still has a place for entirely home-grown groups but where a resurgent al-Qaeda leadership has also regrouped and is now able to once again offer local jihadists training and direction.
One interesting aspect is the way in which Mr Negroponte refers to al Qaeda's "leadership" but does not refer once to Osama Bin Laden, nor to the hunt for him specifically and what progress it is (or is not) making.
His comments clearly came as a surprise in Islamabad.
"It doesn't help," one Pakistan Foreign Ministry spokesperson said.
President Pervez Musharraf's government has consistently pointed to its co-operation with the US in detaining or killing a number of foreign militants linked to al-Qaeda.
It also emphasises that it has been willing to bear major losses by sending troops into the tribal areas of the country, a place which no government, back to colonial days, has ever managed to effectively control.
More than 700 soldiers have died fighting there, a testament to Pakistan's commitment, the government says.
The US is well aware that there is a segment of the Pakistani population which deeply despises President Musharraf's co-operation with the US and which is sympathetic to the Taleban and even al-Qaeda.
Recognising that Pakistan's leader therefore has to play a careful game in terms of his own domestic public opinion, Washington normally refrains from overt criticism, which is what makes John Negroponte's candid remarks so interesting.
They may well reflect growing US frustration at Pakistan's role.
Some signs of tensions between the countries have been emerging for some time, not least over events such as the strikes against targets in Bajur in January 2006 and a religious school in October of that year which Pakistan claimed was carried out by its forces but which most people believe were carried out by the US.
However, a number of other developments also explain why Washington may be becoming more vocal.
Less noticed but equally striking was testimony from Lt Gen Michael D Maples, the Director of the Defense Intelligence Agency, who appeared alongside John Negroponte before Congress.
He said al-Qaeda has "improved its ability to facilitate, support and direct its objectives".
He also talked of "continued Taleban reliance on safe havens in Pakistan".
He expressed concern over Pakistan's policy towards its tribal areas.
In September, the Pakistani government came to an agreement with the tribes of North Waziristan but according to Lt Gen Maples the "tribes have not abided by most terms of the agreement. Al-Qaeda's network may exploit the agreement for increased freedom of movement and operation".
There has been growing concern that the deal has not led to the crackdown on foreign fighters that was supposed to occur but instead provided them with increased freedom.
Over 700 Pakistani troops have died fighting militants on the border
Rather than driving foreign fighters out, it has provided them with a base in which to operate and build alliances, allowing al-Qaeda to strengthen and restore some of its capability.
Militants are believed to be exercising growing control over local communities.
And in turn, the Taleban has also been provided with a base meaning that violence in Afghanistan has increased, not decreased as promised, according to both the Afghan government and Nato officials.
The number of suicide bombings - once unheard of in Afghanistan - has also been increasing rapidly.
Critics argue that Pakistan is happy to attack foreign fighters but less keen on dealing with domestic militant groups with ties to al-Qaeda and those who support the Taleban, believing they remain "strategic assets" to be deployed in either Afghanistan or Kashmir.
Pakistan maintains that al-Qaeda's leadership is operating on the Afghan side of the border.
In reality, the very notion of a border is largely meaningless since local Pashtun tribes have never recognised its existence and move freely back and forth.
Pakistan has talked of building a fence and even mining parts of the border, a move which Afghanistan has criticised.
Tensions between Afghanistan and Pakistan have been escalating significantly in recent months which has become a matter of concern for the US.
John Negroponte may be moving on from running the US intelligence bureaucracy to dealing with diplomacy, as the number two at the State Department, but he is likely to find that Pakistan remains near the top of his in-box.