India handed the list to Pakistan earlier this year but only made it public last week as it sought to ratchet up pressure on its neighbour in the wake of the death of Osama bin Laden, who was found living near Islamabad.
The list was prepared by the home ministry in consultation with investigating agencies and included the name of Wazhul Qamar Khan, who was wanted for his alleged role in the bombing of trains in Mumbai in 2003.
But Khan has since been found in the outskirts of Mumbai, where he is out on bail after being arrested by local police over his apparent role in the blasts, local reports say.
Home Secretary GK Pillai on Tuesday acknowledged the gaffe.
"The ministry takes responsibility for mistakenly including the name of Wazhul Qamar Khan," he told the NDTV news channel. "We deeply regret the blunder of including his name in the most-wanted list."
The ministry has ordered a probe into the mistake, a home ministry official told AFP on condition of anonymity.
India blames Pakistan-based militant groups like the banned Lashkar-e-Taiba (LeT) of carrying out many of the attacks in the past years.
It also accuses Pakistan of providing a sanctuary to Mumbai's underworld don Dawood Ibrahim and LeT founder Hafiz Saeed, accused of planning the 2008 Mumbai attacks in which 166 people died.
In 2008, following the Mumbai attacks, India also served Islamabad with a demand to hand over 20 "most-wanted" criminals and militants.
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