He, however, said he has "very much doubt" that ISI and military as institutions would like to be part of something like Mumbai attacks as that would be "counter-productive".
"I think there is no doubt that whosoever is this Major Iqbal is, was in touch with this man (David Headley)," he told a news channel when asked about the evidence coming out in Pakistani-Canadian Tawahur Rana`s trial about an ISI officer`s links to 26/11.
"But the crucial question is that did Major Iqbal act under instruction from ISI hierarchy or is he one of these people who are operating on their own at lower levels."
Khan said he was ready to accept involvement of lower level staff of ISI with terror elements. "I think I would certainly accept that," he said.
On possibility of Pakistan`s nuclear assets falling into hands of jihadis, Khan said he was confident of their safety.
Probed further if he can completely rule out possibility of jihadi sympathisers infiltrating into forces and laying hands on fissile material, he said, "I will not be 100 percent sure but 99 percent sure that this will not be allowed to happen."
On the notion that Pakistan Army is not taking a hard enough position against anti-India groups, he said there is a feeling in Pakistan that this attitude has to change.
"Now after bin Laden, Karachi, they must think that terrorism, not India is the major concern...This feeling is surely going to be accepted by the army," he said.