The Taliban are in much stronger financial shape than Al-Qaida and rely on a wide range of criminal activities to pay for attacks on US and coalition forces in Afghanistan, a senior Treasury Department official has said.

David Cohen, the department's assistant secretary for terrorist financing, said the extremist group extorts money from poppy farmers and heroin traffickers involved in Afghanistan's booming drug trade. The Taliban also demand protection payments from legitimate Afghan businesses, he said yesterday during a speech at a conference on money laundering enforcement.

President Barack Obama and his top advisers are discussing whether many more troops may be needed in the eight-year-old Afghanistan conflict. A critical part of the deliberations is whether the fight should be a narrower one against Al-Qaida or a broader battle against the Taliban-led insurgency.

According to Cohen, Al-Qaida is a cash-strapped organisation that is losing its influence. That condition is the product, he said, of a long-running effort by the United States and its allies to cut off the terror group's sources of funding by targeting its deep-pocketed donors and interfering with its ability to move money.

In the first half of 2009, he said, Al-Qaida's leaders made four public appeals for money to bolster recruitment and training.