Asif Choto, the head of the outlawed Lashkar-e-Jhangvi organisation, was seized over the weekend when agents stopped a car on a motorway between Rawalpindi and Lahore, a senior security official told AFP on Wednesday.
"He was the most wanted sectarian militant in Pakistan," said the official, who spoke on condition of anonymity. "This is one of the biggest achievements towards neutralising religious terrorism in this country."
Several other senior officials also confirmed the arrest.
Lashkar-e-Jhangvi is regarded as the fiercest of Pakistan's Sunni extremist outfits and has mounted numerous attacks on the minority Shiite Muslim community since it was formed in 1996.
Security officials say foreign Al-Qaeda operatives are allied with Pakistani Sunni groups including Lashkar-e-Jhangvi, funding their sectarian attacks in a bid to destabilize President Pervez Musharraf's government.
While the two communities generally live in harmony, thousands of Shiite and Sunni Muslims have been killed in Pakistan in recent years in bomb blasts, suicide attacks and targeted killings.
Security forces arrested another Lashkar-e-Jhangvi militant named Rashid, alias Shahid Satti, at the same time as Choto, a senior police official said.
"These are prized catches and should break the back of Lashkar-e-Jhangvi in Pakistan," the official said.
Choto -- a nickname which means small in Urdu and reflects his 5ft 5in (1.65 metre) height, according to officials -- is regarded by Pakistani authorities as the man who introduced suicide bombing as a Lashkar-e-Jhangvi tactic.
He has been accused of planning the May 30 attack on a Shiite mosque in Karachi which left five people dead. A letter purportedly written by him was found on one of the attackers who was injured.
The mosque attack in turn sparked a riot by Shiite youths who torched a nearby KFC restaurant, killing six people.
Officials said Choto also plotted a suicide blast during an annual festival at a crowded shrine in the capital Islamabad on May 27, which left 19 Shiite pilgrims dead.
He has additionally been linked to a suicide bombing in the eastern city of Sialkot in October 2004 which killed 30 Shiites, as well as two bombings in Karachi in May 2004 that left more than 40 people dead.
The extremist was also behind a plan to groom two sisters as suicide bombers, officials said. The women were arrested earlier this year.
"Choto specialised in organising and motivating suicide bombers. He was very dangerous," another security official said.
Lashkar-e-Jhangvi has also been blamed for the murder of US reporter Daniel Pearl in 2002 and for two attempts to assassinate General Musharraf, although Choto is not thought to be linked to those incidents.
Musharraf, a key US ally whose crackdown on extremism has earned him the hatred of sectarian groups across Pakistan, banned Lashkar-e-Jhangvi in August 2001.
The group is named after the firebrand preacher Haq Nawaz Jhangvi. Its activists were mostly trained in Afghanistan under the Taliban regime, which was ousted by US-led forces in late 2001.
The gang then provided shelter and support to Al-Qaeda fighters who fled Afghanistan, security officials say.
