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Terrorism has emerged as an immediate and most potent threat to the free world in the post September 11, 2001 years, because of its real and potential damage to the infrastructure, economy and people. In response to this thereat, developed and developing countries, such as USA and Pakistan, have emerged as front line states in the fight against terrorism with the following objectives; i) prevent future terrorist attacks, ii) reduce the nations vulnerability, and iii) minimize the damage and recovery from attacks that occur. In order to achieve these objectives we require new approaches to intelligence and information gathering and its analysis through the use of information technology. In this paper we attempt to identify, i) the areas where IT can contribute in accomplishing these three strategic security objectives ii) the unique IT problems and challenges in counter terrorism applications where such applications are being used and developed such as in USA, and, iii) lessons learned for developing countries such as Pakistan, so that an IT counter terrorism infra structure can be established with minimum cost in terms of time and money. We have also tried to highlight the role Information Technology and Internet have to play in counter terrorism by developing and using advanced information technologies such as data mining and semantic Web. The challenges posed are discussed and initiatives to be taken are also suggested.