The official said the Libyan-born Libi, a cleric whose real name was Mohamed Hassan Qaid, was killed in a drone strike early morning Monday, Pakistan time. The drone-launched missile was targeted at a suspected militant hideout in Hesokhel, a village in North Waziristan, a tribal region in Pakistan along its border with Afghanistan.
US officials said that Libi, who had appeared in al Qaeda propaganda videos and once escaped from an a US-operated prison in Afghanistan, was a key figure in what remained of the core al Qaeda network founded by Osama bin Laden, who was killed last year in a U.S. commando raid on his hideout near a Pakistani military academy.
The officials spoke on condition of anonymity to discuss intelligence matters.
In the wake of bin Laden's death, officials said, Ayman al Zawahri, an Egyptian doctor who had been bin Laden's long-time deputy, became the leader of al Qaeda's core group, advised and assisted by a small coterie of veteran militants. U.S. officials said Libi had recently emerged as Zawahri's principal deputy.
"Abu Yahya was among al Qaeda's most experienced and versatile leaders - operational trainer and Central Shura head - and played a critical role in the group's planning against the West, providing oversight of the external operations efforts," one official said.
Zawahri "will be hard-pressed to find any one person who can readily step into Abu Yahya's shoes - in addition to his gravitas as a longstanding member of AQ's leadership, Abu Yahya's religious credentials gave him the authority to issue fatwas, operational approvals, and guidance to the core group in Pakistan and regional affiliates," the official added. "There is no one who even comes close in terms of replacing the expertise AQ has just lost."
Some US officials describe Libi, whose real name is Mohamed Hassan Qaid, as number two to Zawahri, the former Egyptian doctor who took over al Qaeda after bin Laden's death.
Pakistani intelligence officials told Reuters they believe Libi, which means Libyan in Arabic, may have been among seven foreign militants killed in Monday's strike by a drone aircraft.
This still image from video obtained October 18, 2011 courtesy of IntelCenter shows al-Qaeda's as-Sahab's video statement from Abu Yahya al-Libi on Algeria. Photo AFP
One of the officials said Pakistani authorities had intercepted telephone chatter about Libi, an al Qaeda theologian and expert on new media whose escape from a US-run prison in Afghanistan in 2005 made him famous in al Qaeda circles.
"We intercepted some conversations between militants. They were talking about the death of a 'sheikh'," one of the Pakistani intelligence officials said, referring to the title given to senior religious leaders.
"They did not name this person but we have checked with our sources in the area and believe they are referring to Libi."
The intelligence official said according to informants, Libi was seriously wounded in the strike and was taken to a private hospital where he died.
Militant commander denies Libi's death
A militant commander in North Waziristan closely associated with foreign fighters however said: "He has not been killed. This is not the first time claims have been made about his death. The Americans are suffering heavy losses in Afghanistan so they have resorted to making false claims."
It can take months to confirm whether drone strikes have killed an Islamist militant leader because the area of the attack is often sealed off by the Taliban in the lawless northwest of Pakistan.
Burials are quick in order to hide casualties and identities.
Residents of the village where Pakistani intelligence officials says Libi may have been killed, Hesokhel, noted an unusually high number of militants gathered there after the drone strike on Monday and they kept people away.
"They usually bury the bodies after a drone strike in the nearest graveyard," said one of the villagers, describing the aftermath of previous strikes in the area. "This time they put all the bodies in their cars and took them away."
A senior Taliban commander in North Waziristan said Libi had been living in Pakistan near the Afghan border since 2005 when he escaped along with three cell mates from the Bagram military base north of Kabul, where US forces run what is considered the most secure US prison in Afghanistan.
Militants often looked up to Libi because of his background as a religious scholar and sought his advice in resolving disputes, the Taliban commander said.
"Man of action"
For the United States, Libi is one of al Qaeda's most dangerous figures. In September last year, the United States Treasury imposed financial sanctions against him. It said Libi, in his late 40s, released 68 public messages on al Qaeda's behalf and was second in visibility only to Zawahri.
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Recently released letters written by bin Laden and captured during the US raid in which he was killed last year show Libi to have been one of a handful of al Qaeda officials relied upon by bin Laden to argue al Qaeda's case to a worldwide audience of militants, in particular to the young.
Believed to have received more theological training than either bin Laden or Zawahri, Libi has a multi-faceted reputation as a man of action, a jihadi scholar and a populist propagandist.
A file photo of slain al Qaeda founder Osama bin Laden and his second-in-command and now al Qaeda chief Ayman al Zawahri.
He was also a unifying figure in al Qaeda, said Gohel.
"There has often been a terse relationship between the Libyan and Egyptian factions within al-Qaeda and it is believed that Libi had bridged that gap," said Gohel.
"His death 'if confirmed' will be another significant blow to al-Qaeda and another example that the controversial drone strike policy is working."
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A Western expert on al-Libi, US scholar Jarret Brachman, had written on his blog: "If true (Libi's death), (this would be) a cataclysmic blow to the future of al-Qaeda's General Command. For my money, there's no recovering from this one."
Some analysts say the death of an al Qaeda leader does not necessarily spell disaster for the group, arguing it is de-centralised and offers inspiration to militants and not just logistical support or financing.
If a drone strike did kill Libi, it would bolster the American argument that the unmanned aircraft are a highly effective weapon against militants.
Pakistan says that, while the CIA-run drone campaign has some advantages, it fuels anti-American sentiment and is counterproductive because of collateral damage.
An MQ-1B Predator drone from the 46th Expeditionary Reconnaissance Squadron. Photo Reuters
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According to reports from North Waziristan, which US government sources did not contest, US drones launched three attacks along Pakistan's border with Afghanistan from Saturday to Monday.
Reports from Pakistan said nearly 30 people were killed in the strikes, including 15 in the strike in which Libi was targeted.
Libi, reportedly born in 1963, made repeated appearances on al Qaeda videos and wrote prolifically, becoming one of the group's most prominent media warriors.
Brachman, also a biographer, says Libi was seen as having made al Qaeda "cool" for a younger generation.
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