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Al Qaeda leader Osama bin Laden has been killed in an American-led operation in Pakistan, US President Barack Obama has announced.
In the latest pictures from Abbotabad, a town just 60 miles from the Pakistani capital Islamabad, flames are seen rising from a building that was the apparent target of the raid.
It is thought Bin Laden had been living in a $1m villa in Abbotabad.
He was reportedly asked to surrender by US forces before he was shot.
Pakistani television stations have broadcast what they say is a confirmed photograph of the bloodied face of the world's most wanted man after he was killed.
In the last few minutes, David Cameron has been speaking from Downing Street, saying the news would be welcomed across the country.
"It is, I believe, a massive step forward," he said.
Earlier, President Obama confirmed in a news conference: "I can report to the American people and to the world, that the US has conducted an operation that killed Osama bin Laden."
The US president said he was briefed about a possible lead to the whereabouts of the the world's most wanted man and mastermind of the September 11 attacks in August and last week appproved an operation "to bring Bin Laden to justice".
"A small team of Americans carried out the operation with extraordinary courage and capability. No Americans were harmed. They took care to avoid civilian casualties," President Obama said.
The body of Bin Laden - who fled the US-led invasion of Afghanistan in 2001 - was recovered by US officials from the compound in Abbottabad, northwest of Pakistan, where he had been hiding.
President Obama said: "After a firefight they killed Osama Bin Laden and took custody of his body."
A US official told reporters that the corpse was being handled in accordance with Islamic customs.
Sky News' chief correspondent Stuart Ramsay said: "I am told that this happened in an attack on a house at 1.30 in the morning Pakistan time. The house has been cordoned off."
It was not clear how long Bin Laden had been staying at the compound.
Reuters quoted a US official as saying a son of Bin Laden's and two other adults were also killed in the raid.
US citizens welcomed the news with hundreds of people gathering outside the White House and in New York's Times Square.
Sky's US correspondent Robert Nisbet said: "We seem to be building a picture that this was very well thought through. Obviously the president was informed every step of the way.
"It appears to have happened a few days ago with final confirmation coming today."
President Obama spoke to former president George W Bush and former President Bill Clinton before announcing Bin Laden's death.
President Bush said it was a "momentous achievement".
"The fight against terror goes on, but tonight America has sent an unmistakable message: No matter how long it takes, justice will be done," he said in a statement.
President Obama also warned that "al Qaeda will continue to pursue attacks" against the US.
"The death of bin Laden marks the most significant achievement to date in our nation's effort to defeat al
Qaeda. His death does not mark the end of our effort," he said.
The US state department issued a worldwide travel alert to all US citizens warning of an "enhanced potential" for US citizens to be targeted.
Cameron urges vigilance after bin Laden death
Prime Minister David Cameron said on Monday that Britain must remain vigilant against potential reprisals following the killing of al Qaeda leader Osama bin Laden in Pakistan by U.S. forces. Skip related content
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British embassies have been asked to review their security measures, but the formal threat level at home was unchanged.
Cameron, who will make a statement to parliament on Tuesday, said in a televised reaction from his official country residence Chequers that bin Laden's death would be "welcomed right across our country.""Of course, it does not mark the end of the threat we face from extremist terror. Indeed, we will have to be particularly vigilant in the weeks ahead. But it is, I believe, a massive step forward," he said.
Foreign Secretary William Hague said he expected heightened vigilance at posts abroad for "some time to come."
"There may be parts of al Qaeda that will try to show that they are still in business in the coming weeks as indeed some of them are," Hague told BBC Radio 4, during a trip to Cairo.
"I have already this morning asked our embassies to review their security."
The Foreign Office advised Britons overseas to avoid large crowds and public events, and Defence Secretary Liam Fox said he had directed his department to "maintain a high level of vigilance in all UK defence facilities at home and abroad."
Britain remains at its second-highest threat level of severe, meaning a militant attack is considered highly likely.
LONDON ATTACK
Cameron said bin Laden, who was killed on Sunday in a firefight with U.S. forces in Pakistan, had been responsible for ordering the death of many British citizens both at home and in other parts of the world.
In July 2005, four young British Islamists inspired by al Qaeda killed 52 commuters in suicide bomb attacks on the capital's transport network. Sixty-six Britons died in the attacks of September 11, 2001, on New York and Washington.
"Above all today we should think of the victims of the poisonous extremism that this man has been responsible for," Cameron said.
Former Prime Minister Tony Blair, in power at the time of the 2005 and September 11 attacks, offered his "heartfelt gratitude" to U.S. President Barack Obama for the operation.
"The operation shows those who commit acts of terror against the innocent will be brought to justice, however long it takes," he said in a statement.
Cameron had been phoned by Obama in the very early hours of the morning, a Downing Street spokeswoman said.
The prime minister then spoke to members of the cabinet as well as National Security Adviser Peter Ricketts.
Bin Laden was shot during an attack on a compound in Abbottabad, north of Islamabad, despite the general assumption being that he had been in the mountainous region between Afghanistan and Pakistan.
"Well, you end up in the business of world politics, terrorism, diplomacy, not being surprised by anything in the end," Hague said, when asked about bin Laden's whereabouts.
Hague said Britain's work in Afghanistan, where it has 9,500 troops, would remain "phenomenally difficult and must go on."
(Additional reporting by Adrian Croft; Editing by Keith Weir)
Breaking News
UK Expels Libya Diplomat After Embassy Attack
Libya's ambassador to the UK is being expelled after the British embassy in Tripoli was attacked. Skip related content
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Foreign Secretary William Hague said Omar Jelban was "persona non grata" and had been given 24 hours to leave the country.
Diplomatic missions belonging to a number of Nato states have been targeted after an airstrike reportedly killed Muammar Gaddafi's youngest son and three of his grandchildren.All that remains of what was the British embassy building is a burnt-out shell.
Mr Hague said: "I condemn the attacks on the British Embassy premises in Tripoli as well as the diplomatic missions of other countries.
"The Vienna Convention requires the Gaddafi regime to protect diplomatic missions in Tripoli. By failing to do so that regime has once again breached its international responsibilities and obligations.
"I take the failure to protect such premises very seriously indeed.
"As a result, I have taken the decision to expel the Libyan Ambassador. He is persona non grata pursuant to Article 9 of the Vienna Convention on Diplomatic Relations and has 24 hours to leave the country.
"The attacks against diplomatic missions will not weaken our resolve to protect the civilian population in Libya."
:: Daily video blogs from Sky's Mark Stone in Tripoli
Meanwhile, a UN spokeswoman has confirmed international staff are preparing to pull out of Tripoli because of the unrest in the capital.
And in the Libyan city of Misratah, rebels are said to be fighting for control of the city's airport from forces loyal to Col Gaddafi.
A rebel spokesman said: "Fierce fighting is taking place for control of the airport.
"The revolutionaries are making progress. They will manage to secure full control soon, God willing."
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