OTTAWA - Canada's top spy bristled at a federal inquiry's finding that the intelligence community is plagued by lingering co-ordination problems.

In a letter to the public safety minister, Canadian Security Intelligence Service director Dick Fadden clearly takes exception to some of former Supreme Court Justice John Major's conclusions about the 1985 Air India bombing.

The Canadian Press obtained a declassified version of the secret June 29 memo from Fadden to Public Safety Minister Vic Toews under the Access to Information Act.

Though several passages of the memo were withheld from release, it's evident Fadden did not agree with Major's conclusion that while co-ordination within the spy community had improved, central issues remain unresolved.

Major's extensive inquiry report catalogued a litany of federal failures before and after the terrorist attack, which killed 329 people, most of them Canadians.

Fadden's letter says, "While we believe the findings of the commission related to the period immediately pre- and post-1985 are largely legitimate, . . ." (the rest of the sentence was blacked out).

Fadden says things have changed, pointing to better relations between the RCMP and CSIS, a more mature security intelligence service, and better training and resources.

Most important, he adds, there is "a focus on and sensitivity to terrorist threats and investigations unparalleled in history.

"The successful criminal prosecution of individuals engaged in terror-based activities over the past year are an example of improved co-operation in investigation and prosecution, and the priority now placed on meeting this threat."

Liberal public safety critic Mark Holland said Fadden "seems to be very defensive."

"And it would appear to me, more interested in justifying what's going on rather than taking action," Holland said Wednesday after reading the memo.

"He's not acknowledging that there are problems. He's not acknowledging that changes have to be made or that problems exist."

There's no doubt that relations between CSIS and the RCMP have improved since 1985, said lawyer Norm Boxall, who represented many families who lost loved ones in the bombing.

"But that's because the starting point was so low there was tremendous room for improvement."

In releasing his report last June, Major noted the federal government had long suggested that whatever weaknesses existed at the time of the terrorist attack have been fully recognized, analysed and fixed.

"The commission rejects that position," he told a news conference. "There remains a failure to recognize what went wrong, why, and what should be done today."

He recommended new powers for the national security adviser -- currently a low-profile official in the Privy Council Office -- to supervise and co-ordinate intelligence activities.

The adviser would essentially become a national intelligence czar, served by a deputy and a staff of representatives from key security agencies including the RCMP, CSIS, the Canada Border Services Agency and Foreign Affairs.

Major also said the current practice of limiting the information CSIS provides the RCMP -- in order to prevent disclosure in possible criminal proceedings -- is misguided and results in an "impoverished response to terrorist threats."