A Chicago businessman has been charged with helping a friend from military school in Pakistan plot the deadly 2008 Mumbai attacks that killed 166 people.

Tahawwur Hussain Rana, 49, has been held in jail since his arrest in October on charges of helping plot an attack on the Danish newspaper that published incendiary cartoons of the prophet Mohammed in 2005.

Prosecutors allege Rana helped his longtime friend David Coleman Headley, a key suspect in the Mumbai attacks, by allowing him to use his immigration company as a cover for surveillance trips to India and Denmark.

Rana was charged Thursday (local time) with three counts of providing material support for terrorism in the Mumbai attacks, the Denmark terror plot, and to the banned Pakistani militant group Lashkar-e-Taiba.

However Rana, a Pakistani-born Canadian citizen who owns the Chicago-based First World Immigration Services that Headley allegedly used as a cover, insists he is a pacifist who was "duped" by his friend.

"If [Headley's] cooperating, he may not be telling the truth," defence attorney Patrick Blegen said last month after Rana was denied bail on the initial charges related to the Danish plot.

Also indicted on conspiracy charges related to the Denmark plot are Ilyas Kashmiri, an alleged terror kingpin in Pakistan who prosecutors accuse of being in regular contact with Al Qaeda leaders, and Abdur Rehman Hashim Syed, a retired major in the Pakistani military.

Neither man is in US custody.

Headley, 49, has pleaded not guilty to 12 terrorism-related charges and remains in custody, where he is cooperating with prosecutors.

The Washington-born son of a former Pakistani diplomat and American mother, Headley reportedly befriended Bollywood stars and even dated an actress during his lengthy surveillance trips to Mumbai.

The indictment alleges Rana acted as a messenger while Headley scoped out the Mumbai terror targets, taking photos and video and entering their positions on a GPS device.

Nearly a year after the bloody 60-hour siege, which began November 26, 2008, Headley was allegedly recorded discussing targets with Rana.

Headley and Rana were both arrested in October on charges related to the plot to attack newspaper Jyllands-Posten and kill an editor and the cartoonist.

- AFP