India also plans to set up more commando training schools
The Indian cabinet has approved the setting up of a federal investigation agency to strengthen internal security after the Mumbai attacks.
The National Investigation Agency will be empowered to probe terror attack cases across states, reports say. Law and order is a state subject in India.
The cabinet also backed reform of anti-terror laws to make them tougher.
These are the government's first moves to boost security after the attacks that left more than 170 people dead.
The bill for setting up the National Investigation Agency and changes to the anti-terror law are expected to be moved in the Indian parliament at the earliest opportunity, reports say.
Lack of clarity
Correspondents say it is still unclear where the new federal investigation agency will fit in.
India already has a federal Intelligence Bureau (IB) which gathers intelligence relating to internal security and is akin to the UK's MI5 or the US's FBI. The Research and Analysis Wing (Raw) is akin to the UK's MI6, responsible for external intelligence.
India's top detective agency - the Central Bureau of Investigation (CBI) - has a charter to investigate certain crimes.
Experts also wonder where the officers for the new agency are going to come from: the CBI and IB are already operating at 35% below strength.
Reports say the cabinet also approved strengthening anti-terror laws and setting up of fast-track courts for speedy trial of terror-related cases.
The federal law minister Hansraj Bhardwaj said that legislation would be drafted after clearance by the cabinet.
"We will try to balance the right of life and liberty under the [Indian] Constitution with reasonable restrictions," he was quoted as saying by The Hindu newspaper.
India also plans to set up a number of commando training centres to boost security.