The government's critics said the debacle damaged relations with Pakistan because India's security agencies appear extremely lax and unaware of fugitives living under their noses.

Home Minister P. Chidambaram hit back at his critics in a television news program, saying the issue is irrelevant because Pakistan ignores the list and India's demand that Pakistan seek out the fugitives.

Chidambaram said he gave the list to his Pakistani counterpart in March during face-to-face discussions on security issues.

"They never acted on any list," he said. "In fact, I wonder why we are exchanging these lists over the last seven-eight years but that's been a practice.

"As I said, it is embarrassing but it is not something that will change the dynamics of the relationship between India and Pakistan or the status of the discussions between India and Pakistan because Pakistan has always been dismissive of these lists."

New Delhi officials have long believed Pakistan harbors militants who have launched attacks on India, including the deadly November 2008 Mumbai hotel raids. India in particular blames Pakistan-based militant groups, including the banned Lashkar-e-Toiba, for carrying out many of the attacks recent years.

India also accuses Pakistan of providing sanctuary to former Mumbai underworld don Dawood Ibrahim who, along with Lashkar-e-Toiba founder Hafiz Saeed, are among those on the most wanted list.

However, one of the most wanted, Feroze Abdul Rashid Khan, who is accused of involvement in a 2003 train bombing, is in a Mumbai jail, according to a report in the Times of India newspaper.

Another most wanted, Wazhul Kamar Khan, also accused of involvement in a 2003 Mumbai train bombing, is out of jail on bail.

Chidambaram said the government doesn't owe either of the two men an apology. While government regretted the error, extending an apology is "carrying the argument too far" and none would be forthcoming.

"I don't think this is a case where we owe anyone an apology," he said. "If we owe an apology, if we owe a regret, it's the regret that we have (already) expressed, that there was a genuine human error in not updating the list."

The list was also put up on the Web site of the Central Bureau of Investigation but taken down last week after errors were spotted by media.

"Obviously, it embarrasses the Ministry of Home Affairs," Chidambaram said.

The CBI said in a written statement it suspended an inspector, transferred two officials and is investigating the affair.

"A preliminary inquiry has revealed a lapse regarding inclusion of Feroze Abdul Rashid Khan in the list," the statement said.

After the killing of al-Qaida leader Osama bin Laden, Chidambaram reiterated his government's belief that Pakistan allows wanted terrorists to live openly in the country. Bin Laden was killed by a team of U.S. operatives after a battle at a fortified two-story house near Abbottabad -- a main Pakistan military town -- around 30 miles north of Islamabad.

"This fact underlines our concern that terrorists belonging to different organizations find sanctuary in Pakistan," Chidambaram said.

"We believe that the perpetrators of the Mumbai terror attack, including the controllers and handlers of the terrorists who actually carried out the attack, continue to be sheltered in Pakistan."

Mumbai, formerly called Bombay and India's largest city, was the scene of at least 10 coordinated shooting and bombing attacks that killed 164 people and wounded more than 300 over two days.

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