"The chief of al-Qaeda in Saudi Arabia, Yunis al-Hayari, was killed in a shootout in the Riyadh eastern neighbourhood of Rawda," the satellite channel reported.

Two other wanted militants were wounded in the overnight clash, it added.

Hayari topped a list of 36 wanted militants issued by the oil-rich kingdom's interior ministry just last Tuesday.

The shootout came only hours after a lightning visit to Riyadh by British Prime Minister Tony Blair.

Six policemen were lightly wounded in the clash, an Al-Arabiya correspondent reported.

But the interior ministry, which has yet to confirm Hayari's death, insisted no police were hurt.

"There have been no casualties among security personnel," spokesman General Mansur al-Turki said.

He said the shootout took place around 4:00 am (0100 GMT) as security forces raided a house believed to have been used by militants on the new wanted list, the third issued by the Saudi authorities since the launch of a wave of Islamist violence in May 2003.

"One of the fugitives was killed in the raid," he said, declining to name him.

A witness told AFP the dead man was believed to be Hayari and that a number of wanted militants had been arrested following the raid.

Hayari, 36, entered Saudi Arabia on a pilgrimage visa in February 2001 accompanied by his wife and daughter.