The detailed report, submitted by regional police to the PoK cabinet on March 25, states that three banned groups Harkat-ul-Mujahideen, Jaish-e-Mohammad and Lashkar-e-Tayiba are active in PoK capital Muzaffarabad, the BBC reported on Tuesday.
Harkat-ul-Mujahideen and JeM are said to be planning to open madrassas or seminaries in Muzaffarabad, where LeT is already operating a madrassa.
"No officials are allowed to enter these premises to gather any sort of information...We fear these madrassas may be a cover for furthering militant activities," the BBC quoted the report as saying.
The report elaborated how militant groups are growing in size and number across PoK. It especially mentioned the Neelum district, where the groups are said to be the most powerful.
The report states the militants are involved in the logging of trees, one of the most lucrative trades in the region. The militants have also set up offices at Kandal Shahi market in Neelum, where they have become a major law and order headache, the report said.
It mentioned an incident which led to the killing of some locals and a resulting stand-off with the militants.
"The situation was only resolved by the intervention of the local administrator and senior army officials," the report said.
The report also said that authorities should take up the matter with the "intelligence agency responsible for the militants."
It said officials from that agency should relocate the militants to some area near the border as otherwise clashes with local residents could take place.
Last week, two Pakistani soldiers were killed and three more injured in the first suicide attack in PoK. The suicide bomber, aged about 18 years, detonated his explosives in a residential area for military personnel in Muzaffarabad on Friday.
About 150 suspects were rounded up by authorities after the attack. Local residents confirmed to the BBC that there "has been a great increase in militant activity" in parts of PoK.
Raja Faisal Majeed, a lawyer living in a village near where some of the militant groups have set up base, said, "These people are being protected here. Sometimes they operate under the guise of a charity, sometimes as a school. We have protested against them to no avail."
Jamaat-ud-Dawah deputy chief Abdurehman Makki told BBC that his group had not purchased any properties in PoK or been involved in any altercations with locals.
Though the groups mentioned in the report are banned under Pakistan's anti-terrorism laws, it does not advocate any action against them other than to keep an eye on their activities, the BBC reported.
Pakistan banned the JeM and LeT in 2002 after an attack on India's parliament. However, Pakistan Information Minister Qamar Zaman Kaira denied such a report had been submitted to the government.
"No such report has come before the government which shows that these organisations have revived their activities," he said.
"However, if the report was submitted by a secret agency then that is another matter altogether," he added.
The Taliban are reportedly backed by the JeM and Harkat-ul-Mujahideen. JeM was involved in several assassination attempts on top Pakistani officials, including former President Pervez Musharraf.
JeM members were also responsible for the kidnapping and murder of Wall Street Journal reporter Daniel Pearl and the group was linked to the attack on India's parliament.
The Harkat-ul-Mujahideen is JeM's parent organisation and one of the largest militant groups in the world. The LeT is the prime suspect in the Mumbai terror attacks of November 26. The United Nations Security Council last year declared the Jamaat-ud-Dawah a front for the LeT.
