At least three Taleban militants evaded a wide security cordon and hid in a cheap hotel overlooking the parade ground on Sunday.

They opened fire on the parade, sending the President, ministers, foreign diplomats and military top brass diving for cover.

'It was clearly aimed at grabbing an enormous amount of attention, striking in the centre of the capital,' said Ms Joanna Nathan, an analyst for the International Crisis Group.

'It shows them penetrating what was obviously a high security event.'

Three people were killed and 10 injured in the attack.

Afghan security officials yesterday hunted for suspects and deployed troops in parts of the city where government officials and foreigners live. About 100 people were rounded up for questioning, an Afghan intelligence official said.

The attack came days after General Dan McNeill, commander of Nato forces in the country, talked of handing over control of Kabul's security to Afghan troops by the end of the year.

'Now, it has been proven that the Taleban not only have the ability to operate in the provinces, but even in Kabul,' said group spokesman Zabihullah Mujahid, brushing aside Nato claims that the insurgency was weakening.

In pure military terms, the attack missed its objectives, though it was only a matter of chance that Mr Karzai and all the top dignitaries survived.

The sight of Afghan leaders cowering on the ground and troops fleeing will not just hearten Taleban fighters but, more importantly, leave ordinary Afghans wondering how the government can protect them.

'There is no security force in Afghanistan that people trust,' said Afghan parliamentarian Ramazan Bashardost. 'If you look carefully at (Sunday's) incident, the security forces fled the area before the ordinary people did.'

Analysts feel there has been an increase in violence in Afghanistan compared with last year. They also say there is a drop in conventional attacks and a rise in 'asymmetric warfare', according to the Telegraph.

While Western military officers see this as a sign of the Taleban weakening, analysts say the militants appear to have settled on a strategy of outlasting rather than outmatching the West.

This year, the Taleban attacked Kabul's five-star Serena Hotel and killed several foreign civilians. In doing so, it grabbed international headlines for weeks, far more propaganda value than a raid on a village.

REUTERS