The head of al-Qaeda in Iraq was tracked to a village north of Baghdad thanks to tips from disaffected Sunni insurgents, military sources told The Times.

Al-Zarqawi died on Wednesday night when two US Air Force F16 jets dropped a pair of 500lb bombs on his safe house in Hibhib, a backwater surrounded by date orchards. Al-Zarqawi’s deputy and spiritual adviser, Abu Abdul Rahman, also died along with five others who have yet to be identified.

Nouri al-Maliki, the Iraqi Prime Minister, said the $25 million (£13.5m) bounty on al-Zarqawi’s head would be paid.

For months a rift had been growing between al-Zarqawi’s foreign fighters and Iraqi insurgents. The dissidents apparently believed that the tactics of the Jordanian, who kidnapped, beheaded and bombed at will, were too extreme, and wanted to join the political process.

“Some of the insurgent groups’ disgust for al-Zarqawi’s behaviour . . . coupled with our dogged pursuit most certainly played into the taking down of al-Zarqawi,” a US officer said as Iraqi and coalition leaders enjoyed their most successful 24 hours since the capture of Saddam Hussein in December 2003.

“The deal was that these Sunnis would help to hand al-Zarqawi over, so from then on it was all very carefully planned,” another official said.

A British government source said he hoped that the knowledge that there were moles within al-Qaeda’s upper ranks would “sow the seeds of doubt within its leadership” and undermine it further.

President Bush and Tony Blair, whose approval ratings have been dragged to record lows by the Iraq war, moved fast to capitalise on the death of the man who came so close to achieving his declared aim of fomenting a civil war between Iraq’s Sunnis and Shias.

They emphasised that the insurgency would continue. Two bombs killed at least 19 people and wounded 40 in Baghdad yesterday. But Mr Bush said that al-Zarqawi’s death offered a chance to “turn the tide” while Mr Blair said it was a “blow against al-Qaeda everywhere”.

The US military claimed success well beyond the death of al-Zarqawi. It said that it had mounted 17 raids on other suspected al-Qaeda hideouts in and around Baghdad, producing a “treasure trove” of information.

Tony Snow, the White House spokesman, said al-Zarqawi’s death showed that Iraqis were now co-operating with intelligence agents to help them to capture terrorists.

Al-Zarqawi’s death was also a huge boost for Mr al-Maliki, whose three-week-old Government has struggled to halt Iraq’s descent into mayhem. He immediately announced the long-delayed appointments of his Interior, Defence and National Security ministers, one Sunni and two Shias, to complete his new Government.

The trio were overwhelmingly approved by the Iraqi Parliament — a move that Mr Blair called a sign of “a new spirit to succeed”. He went on: “Our task, obviously, is to turn that spirit, that willingness, that desire to succeed into effective action. If we are able to do so, then we will have accomplished something that goes far beyond the borders of Iraq.”

Mr Bush sought to build on the momentum by announcing that he and his entire Cabinet will hold a video-conference summit on Tuesday with military commanders and the new Iraqi Cabinet from Camp David.

Al-Qaeda remained defiant last night, vowing that the “holy war” would continue.

Times Recommends

• The Japanese Prime Minister is doomed: or is he?
• Brighton company 'involved in cyber attack'
• The art of survival: it’s all in the mind