The leader of al-Qaeda in Iraq has reportedly been killed in a gun battle with rival insurgents.

Abu Ayyub al-Masri died in a battle between rival Sunni Muslim fighters at a bridge at Taji in northern Baghdad, the Iraqi interior ministry claimed. It is understood that the killing could not be confirmed as no body has been recovered.

If the reports are true, al-Masri's death would represent a blow for the Islamic fundamentalist organisation. The United States had regarded him as the number one threat to the stability of Iraq, and placed a $5 million bounty on his head.

Brigadier-General Abdul Kareem Khalaf, an Interior Ministry spokesman, suggested that the death was due to an increasingly bitter internal dispute between al-Qaeda's Iraqi leadership and other Sunni insurgents affiliated to the group, over the strategy the organisation was taking.

"The clashes took place among themselves. There were clashes within the groups of al-Qaeda. He was liquidated by them. Our forces had nothing to do with it," he told Iraqi state television.

Barham Salih, the deputy prime minister, added that he also understood that al-Masri had died. "We too have security and intelligence reports that Abu Ayyub al-Masri was killed as a result of fighting between insurgents and al Qaeda yesterday near Taji," he told the Reuters news agency.

Early indications suggest that the clashes which reportedly killed al-Masri were the result of growing friction between the al-Qaeda high-command in Iraq - originating largely from overseas - and other Sunni insurgent groups native to Iraq, which are affiliated to al-Qaeda.

Many Sunni militants in Iraq have been furious at the Egyptian-born al-Masri's authorisation of the mass killing of Iraqi Shia civilians, instead of targeting American and British troops. They have also been angry about al-Qaeda's imposition of an austere brand of Islam in the areas where it holds sway.

An American military spokesman was unable to confirm the reports of al-Masri's death today, and said he was investigating.

"I hope that it is true, but we want to be very careful to make sure," Lieutenant-Colonel Christopher Garver said. "We are in discussions with the Iraqis over how they obtained this intelligence. If we do have a body, we are going to conduct DNA tests, and that will take several days. If there is no body, that makes it harder."

Al-Masri, an Egyptian warlord also known as Abu Hamza al-Muhajir, was regarded as one of al-Qaeda's most dangerous operators.

He replaced Abu Musab al-Zarqawi, a Jordanian, as the group's Iraq leader after al-Zarqawi was killed in an American air strike last June.

When he was first appointed, the US army in Iraq said that he had trained in Afghanistan, and that they expected him to continue along the uncompromising path of his predecessor.

US and Iraqi Government officials accuse al-Qaeda of trying to tip Iraq into full-scale civil war between the country's majority Shia and minority Sunni factions. They blame the Sunni organisation for destroying a holy Shia shrine in Samarra a year ago, an act that unleashed a surge in sectarian bloodletting that has never relented.

Last week, General David Patreaus, the US military commander in Iraq, said that al-Qaeda was "probably public enemy No 1" in Iraq.

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