Syamsir Siregar, head of Indonesia's intelligence agency, said that before his death, Azahari and his compatriot Noordin Mohammad Top - who is still at large - had recruited an unspecified number of trained militants.
"They are capable of carrying out their jobs without being ordered by the two," Siregar said on Wednesday.
Militants may be inspired by Azahari's death to launch fresh attacks, he said.
"It is quite possible since they could not accept the fact that their leader is dead," Siregar replied when asked whether the death could provide motivation for attacks on President Susilo Bambang Yudhoyono or other officials.
Susilo on Tuesday confirmed that he was under an increased security threat, based on information provided by the intelligence agency.
Officials have not disclosed whether any specific threat has been made.
President Susilo confirmed he was
under an increased security threat
Siregar said the militants could turn to kidnapping for ransom to fund their activities.
Warnings about kidnappings have been made before by authorities, but no mention has been made of ransoms.
"There are threats to abduct officials as well as businessmen as part of their efforts to raise funds," he said.
Police and troops in the world's most populous Muslim nation have already been on high alert over the Christmas-New Year period at a time of concerns about reprisal attacks after Azahari's death last month at his East Java hideout.
Azahari and Noordin were key members of the al-Qaida-linked Jemaah Islamiyah (JI) network, blamed for the 2002 Bali bombings which killed 202 people as well as a string of other attacks in Indonesia.
Azahari Husin was killed in a
shootout with police last month
Both are believed to have formed their own force after splitting from JI's mainstream command structure, which is concerned about heavy Muslim casualties in deadly JI blasts in recent years.
Documents found in Azahari's East Java hideaway also indicated that militants were planning attacks over the holiday period.
Spy chief Siregar suggested that a string of bank and jewellery store robberies in Jakarta and neighbouring towns in West Java in recent weeks may also have been carried out by militants "trying to raise local funds".
"(Their) foreign-based funds are quite likely to be dry," Siregar said.
He also urged US, Australian, British and Italian diplomats to contact local police for additional security if they felt threatened.
About 3000 policemen in Jakarta have already been deployed to protect diplomats and their families at embassies and residences, Komang Udayana, Jakarta police chief of operations, was quoted as saying on Wednesday to Jakarta Post.
They were among the nearly 18,000 police who have fanned out across the capital for the Christmas-New Year period.