Abu Ayyub al-Masri, leader of the Iraqi branch of the terrorist network Al Qaeda, has been arrested in the northern city of Mosul, the Iraqi defence ministry said according to broadcaster al-Jazeera.

A native Egyptian also known as Abu Hamza al-Muhajir, he was arrested in what was described as a joint Iraqi-US operation. But media reports late Thursday said the US military had not yet confirmed the arrest.

Al-Masri took over the Iraqi affiliate of Al Qaeda after the local founder, Jordanian fugitive Abu Musab al-Zarqawi, was killed by US forces in a 2006 air raid. A US bounty of $5 million had been on the head of al-Masri since he assumed the Iraqi Al Qaeda leadership.

Last month, al-Masri issued a recording through Islamist militant websites calling for Al Qaeda fighters to launch an offensive in the following weeks against US forces in Iraq.

He also called for stepped up attacks on the so-called Awakening Councils, US-backed Sunni Muslim tribal forces recruited during the last week to fight largely Al Qaeda in Iraq insurgents.