More than eight hours after the Iraqi announcement, the U.S. military said it still had no confirmation that Abu Ayyub al-Masri, an Egyptian, had been seized.
If true, the arrest would be another blow for Sunni Islamist al Qaeda, which has been forced to regroup in northern Iraq after a wave of U.S. military assaults in the past year.
An Interior Ministry spokesman said an associate of Masri detained in an earlier operation took Iraqi security forces late on Wednesday to where the al Qaeda leader was hiding.
After being detained, Masri confessed to being the al Qaeda in Iraq leader, he said, adding that his identity still had to be confirmed. Other Iraqi security officials said the suspect, also known as Abu Hamza al-Muhajir, was in U.S. custody for identification. U.S. military officials did not comment on this.
Al Qaeda in Iraq was headed by the Jordanian militant Abu Musab al-Zarqawi until he was killed in a U.S. air strike in June 2006. His successor, Masri, was Zarqawi's close associate, and has a U.S. bounty of $5 million on his head.
Duraid Kashmula, the governor of Nineveh province of which Mosul is the capital, said the detained man had confessed to being Masri. "When police entered the house, they found him asleep," Kashmula said, adding the suspect was alone.
"These is no doubt that the person arrested is Masri. The operation was very quick and easy. There were no clashes," he added.
U.S. officials blame al Qaeda in Iraq for most big bombings in the country, including an attack on a revered Shi'ite shrine in Samarra in February 2006 that set off a wave of sectarian killings that nearly tipped Iraq into all-out civil war.
A build-up of U.S. troops last year allowed the military to conduct a series of offensives against the group. The emergence of Sunni Arab tribal security units also helped to provide intelligence on al Qaeda activities.
The result was that al Qaeda has largely been pushed out of Baghdad and its former stronghold in the western province of Anbar to areas in northern Iraq, such as Mosul.
U.S. generals say Mosul is al Qaeda in Iraq's last remaining urban stronghold in the country. However, U.S. commanders warn that the group, while significantly weakened, can still carry out large-scale attacks.
Iraq's Interior Ministry said last May that Masri had been killed, but soon afterwards al Qaeda released an audio tape it purportedly from him.
In an hour-long audio tape issued last month also said to be from him, Masri called for renewed attacks on American troops and lashed out at U.S. President George Bush.
He urged militants from the Sunni Islamist group to "celebrate" the announcement that the number of U.S. troops killed in Iraq had passed 4,000. "We must celebrate this event in our special way, and make the defeated Bush join us in this celebration," he said.
He called on al Qaeda fighters to provide "a head of an American as a present to the trickster Bush" in a month-long campaign that he called the "Attack of Righteousness".
Al Qaeda in Iraq shares a name and ideology if not organisational ties with Osama bin Laden's network, which was blamed for the Sept. 11, 2001 attacks on the United States.
The U.S. military says al Qaeda in Iraq is largely foreign led but that its foot soldiers are mainly Iraqis.