President Bush said the capture of Abu Farj al-Libbi, a Libyan with a $5 million (£2.6 million) price on his head, represented a “critical victory in the war on terror”.

Mr Bush described al-Libbi as a “top general” for Osama bin Laden and a “major facilitator and chief planner for the al-Qaeda network”. His arrest “removes a dangerous enemy who was a direct threat to America”.

Western intelligence agencies regard al-Libbi as commander of the terror network’s day-to-day operations, and the one who runs its terror cells abroad, including recruits in Britain. British intelligence agents will be allowed to question al-Libbi.

Al-Libbi, 28, is also believed to be among the handful of al-Qaeda operatives likely to know the whereabouts of bin Laden.

Pakistani intelligence chiefs and CIA agents said to have taken part in his capture were angry that word of his arrest leaked out before they had a chance to move against others in the group.

Al-Libbi is said to have planned two assassination attempts against President Musharraf of Pakistan.

One senior Western intelligence source said the arrest had “broken the back of bin Laden’s terror operation”. “Al-Libbi’s hand controlled all al-Qaeda’s terrorist puppets,” he said.

A gifted computer expert, al-Libbi would know the identities of key figures worldwide, their coded communications network and future terror plans.

Al-Qaeda will have to reorganise its set-up, such as changing the hiding places for its “sleepers” abroad and the way it sends messages.

Pakistani officials refused to say last night what al-Libbi has told them so far about bin Laden’s whereabouts, but Aftab Khan Sherpao, the Interior Minister, said his information showed that they were “on the right track” to capturing the al- Qaeda leader. He said that al-Libbi and five other foreign militants seized with him had already given “lots of tips”. “He was a big, big catch,” he said.

Last night there was some dispute as to where the Libyan was found. The official version is that there was a two-day gun battle at a farmhouse in the Waziristan tribal region. But security sources in Islamabad said a tip-off led troops to raid homes in the village of Fatami, near the northwestern town of Mardan, close to the Afghan border. Ministers would not say where al-Libbi is being held.

In his wanted posters released a year ago, al-Libbi was shown as a slight figure with a neatly trimmed beard and wearing a suit and tie. In a picture released yesterday he appeared dishevelled and exhausted, his face disfigured by a skin complaint.

Officials say it is likely that he will be handed over to the Americans for further questioning.

CIA agents are operating in the mountains bordering Pakistan and have spent considerable sums to persuade local tribal leaders to betray the movements of al-Qaeda’s most wanted agents.

Al-Libbi is seen as “a planner, not a doer”. He is alleged to have helped to organise the September 11 attacks with Khalid Sheikh Mohammed, his mentor, who was arrested in March 2003.

It was after this arrest that the Libyan was promoted to No 3 and given the task of liaising with “sleepers” and shifting around al-Qaeda’s finances to limit the damage done to the network.

He was already close to bin Laden after working as his personal assistant for a number of years. Computers found after a series of arrests last year revealed that al-Libbi ordered two agents in Britain to travel to Pakistan for a crisis meeting.

MI5 officers will want to know what happened to the two men, and the instructions they were given.

The priority for the Pakistanis is the two botched assassination plots against General Musharraf in December 2003.

The President narrowly escaped the bomb attacks near his official residence in Rawalpindi. Seventeen people were killed in a Christmas Day suicide attack on the President’s motorcade.

Al-Libbi is also suspected of orchestrating other bombings in Pakistan, including an attempt to kill Shaukat Aziz, the Prime Minister.

MOST WANTED: ABU FARJ Al-LIBBI

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