(CBS) Some al Qaeda leaders reportedly have taken refuge in Iraq, presenting the U.S. with both a dilemma and an opportunity.

It has been reported that Iraq is harboring al Qaeda members before, but U.S. intelligence officials told The Washington Post in Wednesday's editions that recent information indicates there are more of them and more leaders than previously believed.

"There are some names you'd recognize," one defense official told the paper.

"There are al Qaeda in a number of locations in Iraq," said Defense Secretary Donald Rumsfeld at a news conference Tuesday, but he would not go further.

One of the more interesting reports, not yet confirmed, is that Sept. 11 hijacker Mohamed Atta met with an Iraqi intelligence agent in Prague in April 2001.

While the news indicates that rooting out al Qaeda would be more difficult for the U.S., it might also provide another reason for military action against the Iraqi government. Some members of the administration have been pressing for evidence to support such a move to topple Saddam Hussein.

White House spokesman Ari Fleischer cited the death of Palestinian terrorist Abu Nidal in Baghdad, where he had been living for the past four years.

"The fact that only Iraq would give safe haven to Abu Nidal demonstrates the Iraqi regime's complicity with global terror," he said.

However, the Iraqi government recently seems to have tried to distance itself from fugitive terrorists, and a senior U.S. intelligence official said there is no evidence that Hussein has formally "welcomed in or sheltered" terrorists.

Rumsfeld dismissed the idea that terrorists could be hiding in Iraq without the full knowledge and permission of the government.

"In a vicious, repressive dictatorship that exercises near-total control over its population, it's very hard to imagine that the government is not aware of what's taking place in the country," he said.

In an interview Tuesday with CBS News anchor Dan Rather, Iraqi deputy prime minister Tariq Aziz admitted al Qaeda are operating in his country, but said they were in the northern part controlled by the Kurdish opposition.

A spokesman for the Kurdish opposition in Washington said a group of about 120 Arabs with some links to al Qaeda did arrive in the area last September, and their numbers have grown since then. U.S. officials say they are not surprised, but what does worry them is the presence of "second- and third-tier" al Qaeda operatives in Iraq who may be capable of planning another attack against the U.S.