(Repeats to fix typo in third graph)

WASHINGTON, Oct 8 (Reuters) - A draft report by U.S. intelligence agencies concludes that Afghanistan is in a downward spiral and casts serious doubt on the ability of the Afghan government to stem the rise in the Taliban's influence there, the New York Times reported on Wednesday.

The classified report finds that the breakdown in central authority in Afghanistan has been accelerated by corruption within President Hamid Karzai's government and by an increase in attacks by militants operating from Pakistan, the Times said, citing U.S. officials familiar with the document.

The report, a nearly completed version of a National Intelligence Estimate (NIE), is set to be finished after the November elections and will be the most comprehensive U.S. assessment in years on the situation in Afghanistan, the paper said.

Beyond the cross-border attacks launched by militants from neighboring Pakistan, the intelligence report asserts that many of Afghanistan's most vexing problems are of the country's own making, the officials said.

The report cites gains in the building of Afghanistan's national army. But officials said it also laid out in stark terms what it described as the destabilizing impact of the booming heroin trade, which by some estimates accounts for 50 percent of Afghanistan's economy.

A National Intelligence Estimate is a formal document that reflects the consensus judgments of all 16 U.S. intelligence agencies. Most NIEs remain classified.

U.S. Army Gen. David Petraeus said on Wednesday that negotiations with some members of the Taliban could provide a way to reduce violence in sections of Afghanistan gripped by the intensifying insurgency.

Petraeus, the former commander in Iraq who is credited by U.S. officials with saving Iraq from civil war, is scheduled on Oct. 31 to take over U.S. Central Command, which oversees American military interests across the Middle East and into south and central Asia.

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