Italian police yesterday arrested a Pakistani father and son accused of helping fund and providing logistical support for last year's terrorist attacks in Mumbai, India, authorities said.

The two were arrested in an early morning raid in Brescia, where they managed a money transfer agency, police in the northern Italian city said. The day before the attacks began on 26 November, they sent money using a stolen identity to a US company to activate an internet phone account used by the attackers and their accomplices, said Stefano Fonzi, the head of anti-terror police in Brescia.

Italian police began the probe in December after being alerted by the FBI about the transfer, Fonzi said.

Ten militants, allegedly from Pakistan, killed 166 people in a three-day assault on luxury hotels, a Jewish centre and other sites in India's financial capital.

The funds were transferred under the identity of another Pakistani man who had never been to Italy and was not involved in the attacks, Fonzi said. His identity was probably stolen when he used another money transfer agency in Pakistan, Fonzi said.

The order to open the account that allowed the attackers to communicate during the massacre came from two men in Pakistan, he said. Fonzi added that Italian authorities had shared details of their identities to Pakistani officials.

The two suspects in Brescia, identified in the statement as 60-year-old Mohammad Yaqub Janijua and 31-year-old Aamer Yaqub Janijua, are accused of aiding and abetting international terrorism as well as illegal financial activity.

Transferring funds using the identity of other people was a common practice at the Madina Trading agency in Brescia, Fonzi said in a telephone interview.

Two more Pakistanis were arrested in yesterday's raids for allegedly committing fraud and other crimes using the same system, but they were not linked to the Mumbai attacks. A fifth Pakistani man escaped arrest and was still being sought. An additional 12 people were flagged to prosecutors for possible investigation but were not arrested, Fonzi said.