The leader of al-Qaeda in Iraq has been killed in a battle with a rival Sunni militant group, Iraqi officials claimed yesterday, almost a year after he assumed command of the terrorist network.

Abu Ayyub al-Masri was hunted relentlessly by American forces, who dubbed him public enemy No 1 and put a $5 million bounty on his head. He was hated by the Shia, whom he slaughtered in their thousands with car bombs. He was finally killed at the hands of his fellow Sunni hardliners, the Interior Ministry said.

An Iraqi intelligence report suggested that al-Masri had fallen foul of a growing feud between his foreign-led al-Qaeda cells and home-grown Sunni insurgents. Local groups have protested at the terrorist network’s random slaughter of tens of thousands of Shia and, increasingly in the past year, of targeting Sunni civilians to cow them into acknowledging al-Qaeda’s dominance.

“There is intelligence information. Some information needs confirmation, but this information is very strong,” said Brigadier-General Abdel Karim Khalaf, the ministry’s operations director.

The American military said that it was trying to verify the report, wary of previous false claims by the Government that al-Masri had been killed or wounded.

Ali al-Dabbagh, the government spokesman, said that “intelligence information” pointed to al-Masri’s death, but refused to confirm whether his body had been recovered. “DNA tests should be done and we have to bring someone to identify the body,” he said.

An internet statement in the name of al-Qaeda denied that al-Masri had been killed.

The network has lost support in its traditional stronghold of the Sunni Triangle in western Iraq, where tribes angered at their bloodthirsty tactics have turned against them. They have been forced into Diyala province to the northeast of Baghdad, where al-Qaeda has tried to carve out a Taleban-style caliphate with other Sunni groups.

The group made a tactical error in targeting prominent Sunni sheikhs who refused to collaborate with them in the western desert of the Sunni Triangle. Many Sunni tribal leaders want to focus their attacks solely on the US Army. The Abu Risha, the largest tribe in the western Anbar region, have killed al-Qaeda operatives even as they fight the Americans, and have set up their own clan-based militia to protect their areas from “Arab fighters”.

While welcoming al-Qaeda’s solidarity in fighting the Americans, Sunni insurgents often resented the outsiders having so much control.

The fighting that appears to have cost al-Masri his life occurred in Tajji on the northern fringes of Baghdad, an area long dominated by al-Qaeda. “The clashes took place among themselves,” Brigadier Khalaf said. “There were clashes within the groups of al-Qaeda. He was liquidated by them. Our forces had nothing to do with it.”

Iraqi politicians welcomed the news of al-Masri’s death, but were cautious about predicting an end to the violence.

Like Abu Musab al-Zarqawi, his predecessor in al-Qaeda’s command, al-Masri was not an Iraqi. His nom de guerre means “the Egyptian”. Little was known about him except that he was an expert car-bomb maker believed to have joined al-Qaeda in Afghanistan. He maintained a low profile that matched his shadowy origins, but his brutality rivalled that of his former chief.

Al-Qaeda claimed that he had killed personally two American soldiers kidnapped on patrol in Yusufiya, south of Baghdad, in June, as a way of “making his presence felt”.

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