Watching the 2008 Mumbai carnage live from Pakistan, terror outfit Lashkar-e-Tayiba handlers guided the attackers on phone and even asked them to change tactics to challenge the advancing commandos.

The strategy followed during the 60-hour siege of Mumbai emerged during the testimony of 26/11 co-accused David Headley in a Chicago District Court on the third day of the trial of his childhood friend and Pakistani-Canadian Tawahhur Rana.

Rana has been slapped with a dozen charges in connection with the November 2008 attack in which 166 persons were killed while Headley, a Pakistani-American and a star prosecution witness, has pleaded guilty.

Headley told the court that his Lashkar handler Sajid Mir was in Karachi during the Mumbai attack.

Sajid Mir told Headley that a couple of people were with him.

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Sajid Mir was in contact with the attackers via phone and he was watching TV coverage of the siege and seeing what was going on in India, he said.

Sajid Mir was praised by Rana for his Chabad House attack strategy and even called him Khalid bin Walid, one of the greatest Generals in history, Headley testified.

About the operation at Chabad House in Mumbai, Headley said Sajid Mir told the two boys (attackers) to use mattresses and  ambush the Special Forces who were descending down the staircases. Six people were killed in the attack on Chhabad house, a Jewish community centre.

According to Headley, a Pakistani-American, Rana said this strategy was tactically brilliant and that he be called Khalid bin Walid, a famous Arab military strategist during the times of Prophet Mohammed in the seventh century.

Headley also said he told Sajid Mir that he has received a compliment from Rana for his "tactical brilliance."

Headley also said that Rana sent message for him from Major Iqbal, who was his ISI handler. This was before he took the last trip to Mumbai for surveillance ahead of the attacks.

Headley said Sajid Mir expressed his frustration that he did not follow all his instructions -- one was "I was not suppose to go back to India after the Mumbai attack and travel to Denmark."

Headley told Rana his four targets were Somnath -- an ancient temple in Gujarat, Bollywood (the Indian movie industry), Shiv Sena and Jyllands Posten, the Danish newspaper which published the controversial cartoons of Prophet Mohammed.

On his discussion with Rana, Headley said "Rana told me to stop doing what I was doing and that he was offering me a job at his farm."

"I spoke to Rana about four targets and he said 'If you did those four targets you are still not going to stop,' " Headley said recalling what Rana told him.

Rana also said that the nine of the 10 Mumbai attackers who died should be given Nishan-e-Haidar (Pakistan's highest military bravery award), according to Headley.

Headley also talked about his conversation with another of his Pakistani handlers Pasha and the new email he would create.

While Headley was reading his own transcripts, the federal prosecutor was reading that of Pasha.

Headley also said, "Major Iqbal went to my house in Lahore in Pakistan, my employee told me over there."

Headley during his testimony to the government prosecutor said that he had sent some emails to Rajaram Rege of Shiv Sena. Yesterday, he spoke of a plot involving LeT and ISI to assassinate Sena supremo Bal Thackeray.