Abu Musab al-Zarqawi, the leader of al-Qaida in Iraq, has been killed in a US air strike, the Iraqi prime minister announced today.

Zarqawi, an iconic figure who acted as the axis of insurgent operations against the Iraqi government and US-led forces, died in a military operation targeting a house in Baquba, 30 miles north-east of Baghdad, last night (watch the US military video here).

Applause broke out when Nuri al-Maliki announced: "Zarqawi was eliminated". Mr Maliki said the Jordanian-born militant and seven aides were killed in a house in the volatile province of Diyala.

The air strike came after US forces acted on intelligence reports provided to Iraqi security forces by local residents.

The US military later released a photograph apparently showing a bearded Zarqawi with his eyes closed and blood on his face, and said his body was identified by fingerprints, scars and tattoos.

Major General Bill Caldwell, a spokesman for US forces in Iraq, said the strike was carried out by two F16s, which dropped two 500lb bombs on the house after it was established that Zarqawi was inside.

Maj Gen Caldwell said six people died in the raid, including a woman and a young person. Only two have so far been identified.

The strike came amid more attacks by insurgents, with at least 19 people killed and another 40 wounded when two bombs ripped through a market and police car in Baghdad. Another six people died and 15 were wounded when a car bomb exploded in the north of the city.

Zarqawi, aged around 39, was blamed for leading foreign insurgent fighters in Iraq in strikes against Muslim Shia targets.

He was believed to have masterminded the bombing of the UN headquarters in Baghdad in August 2003, and to have personally beheaded the British hostage Ken Bigley in October 2004.

Zarqawi headed US-led forces' most wanted list in Iraq. There was a $25m reward for his capture - the same as that offered for the al-Qaida leader, Osama bin Laden.


DEATH IS 'GOOD OMEN' FOR IRAQ

The US ambassador in Iraq, Zalmay Khalilzad, described Zarqawi's death as a "good omen" for Iraq and its new government.

Tony Blair and the US president, George Bush, both said Zarqawi's death was a major setback for al-Qaida.

"A blow against al-Qaida in Iraq is a blow against al-Qaida everywhere," Mr Blair, speaking at his monthly news conference, said.

"I don't think there is any doubt that he was the hands-on leader of al-Qaida in Iraq but there are other people who will want to continue the killing. They also know that our determination to defeat them is total."

Mr Bush welcomed news of Zarqawi's death. Speaking in Washington, he said: "He turned Iraq into a place where al-Qaida could wage war against free nations."


CAUTION URGED IN AFTERMATH OF KILLING

Al-Qaida in Iraq confirmed the death of its leader in a statement on the internet. It vowed to continue its holy war.

"We want to give you the joyous news of the martyrdom of the mujahed sheik Abu Musab al-Zarqawi," the statement, signed by Abu Abdel-Rahman al-Iraqi, identified as the deputy leader the organisation in Iraq, said.

"The death of our leader is life for us. It will only increase our persistence in continuing holy war so that the word of God will be supreme."

Some urged caution about the impact of Zarqawi's death.

Lord Garden, a former assistant chief of defence staff, said: "Whether it makes much difference to the overall level of violence is dubious, because he was responsible only for a small amount of the terrorist attacks."

Amir Muhammed Ali, a Baghdad stockbrocker, predicted that the resistance to US-led forces would continue.

"[Zarqawi] didn't represent the resistance ... someone will replace him and the operations will go on," he said.

However, Mr Maliki warned that "whenever there is a new al-Zarqawi, we will kill him". "Those who disrupt the course of life, like Zarqawi, will have a tragic end," said Mr Maliki.

Zarqawi had taunted US-led forces in Iraq for many years, rousing his followers with a series of messages released on the internet.

He was wounded and came close to being captured several times, but evaded his pursuers.

US and Iraqi forces had been hunting for him using a picture obtained when they arrested his alleged driver and bodyguard around 18 months ago.

In April this year, Zarqawi appeared publicly for the first time since the insurgency began three years ago.

A video posted on the internet showed him speaking directly to the camera. Dressed in black, and with his chest covered in ammunition pouches, he appealed to Iraqi Sunnis to support his fight against US-led troops and their Iraqi supporters.

According to the Observer writer and al-Qaida expert Jason Burke, Zarqawi grew up in a rough city, becoming involved in theft, violence and possibly sexual assault.

"He went to prison, where he became involved in radical Islam. He was released in an amnesty and went to Afghanistan where he set up his own training camp," Burke told Guardian Unlimited.

Once the Taliban had been defeated by the 2001 US invasion of Afghanistan, Zarqawi returned to the Middle East and set up in Iraq.

In the past year, he moved his campaign beyond Iraq's borders, claiming to have carried out the triple suicide bombing of hotels in Amman that killed 60 people last November.

He also claimed to have carried out other attacks in Jordan and a rocket attack from Lebanon into northern Israel.