Pakistani officials are moving to shut down a charity linked to the militant group accused of masterminding the Mumbai attacks by freezing its assets and placing its leader under house arrest.

Hafiz Mohammed Saeed, head of the charity organization Jamaat-ud-Dawa, and four top officials will be detained at home for three months, Lahore police Chief Pervez Rathor said Thursday. It was not immediately clear if they would be charged with anything.

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In this undated file photo, Islamic charity Jamaat-ud-Dawa chief Hafiz Mohammed Saeed is seen in Akora Khattak, Pakistan. ((Associated Press))

Earlier Thursday, Pakistani officials said they were closing all of the organization's offices, while the country's central bank has frozen its assets.

"The Interior Ministry has issued instructions to all four provincial authorities to close down all Jamaat-ud-Dawa's offices and keep an eye on their activities," a senior ministry official told the Associated Press on condition of anonymity.

A UN Security Council committee on Wednesday declared the Pakistan-based charity a front for Lashkar-e-Taiba, which India has accused of being behind the Nov. 26 attacks that left 171 people dead, including two Canadians. The decision, slated for review by Pakistan's cabinet means the charity will be subject to UN sanctions.

Saeed has denied his organization was involved in terrorist activity and decried the accusation as an attack on religious groups. He said the group will petition the UN, as well as national and international courts, to overturn the decision.

"If India or the U.S. has any proof against Jamaat-ud-Dawa, we are ready to stand in any court. We do not beg; we demand justice," Saeed said at a news conference Thursday in the eastern city of Lahore, before police announced he was being put under house arrest.

Under pressure from India to take action, Pakistani authorities have arrested at least 20 people in their crackdown on militants, including two extremists alleged by India to be closely connected to the Mumbai attacks.

Earlier in the day, Indian officials responded to Pakistan's recent efforts by urging the neighbouring country to fully dismantle insurgent operations and camps based within its borders.

"What we are telling the government of Pakistan is to act," Foreign Minister Pranab Mukherjee said in a speech to Parliament.

Pakistan has indicated anyone connected with the Mumbai attacks who is found on its soil will be punished according to its laws despite suggestions from India that it wants suspects in the attacks transferred to its custody.

Pakistani Prime Minister Yousuf Raza Gilani on Wednesday confirmed that Lashkar's operations chief, Zaki-ur-Rehman Lakhvi, and another man suspected of being connected to the Mumbai attacks had been arrested and were being held for questioning.

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Mumbai's additional chief metropolitan magistrate, N.N. Shrimangale, left in black, comes out from police headquarters after granting authorities permission to hold the only surviving attacker for a further two weeks in Mumbai. ((Manish Swarup/Associated Press))

Several offices of Lashkar-e-Taiba have also been raided by Pakistani troops in Pakistan's portion of the disputed region of Kashmir this week, officials said Wednesday.

Meanwhile, India's top law enforcement official on Thursday announced sweeping changes to the country's security and intelligence agencies, which have come under heavy criticism in the aftermath of a series of deadly attacks across Mumbai.

The measures, announced Thursday by Indian Home Minister Palaniappan Chidambaram, are the Indian government's first comprehensive response to public criticism over security and intelligence shortcomings during the attacks.

"Given the nature of the threat, we can't go back to business as usual," Chidambaram said in a speech to India's Parliament, adding he would "take certain hard decisions to prepare the country and people to face the challenge of terrorism."

The government plans to boost coastal security and training for local police, as well as create an FBI-style national investigative agency, Chidambaram said. It will also make efforts to strengthen anti-terror laws and increase intelligence sharing.

The home minister, whose predecessor was ousted just days after the attacks, has previously acknowledged there were government "lapses" during the three-day ordeal that left 239 people wounded.

'It is against all human values'

Chidambaram's announcement came as security concerns prompted Indian officials to back down from a plan to have the sole surviving gunman in the attacks, Ajmal Amir Kasab, appear in Mumbai court.

A magistrate who came to police headquarters instead gave authorities permission to detain Kasab for another two weeks, according to public prosecutor Eknath Dhamal.

Kassab, 21, has told investigators he belonged to Lashkar-e-Taiba, which has links to the disputed region of Kashmir, and provided detailed information about how the attacks were planned and executed, as well as about the other nine attackers involved.

Many defence lawyers in Mumbai, still galled by the attacks, have rebuffed requests to represent Kasab.

"I will not represent him. It is against all human values," said lawyer Dinesh Mota, who refused the court's invitation.

With files from the Associated Press