Abu Farraj al-Libbi (search), believed by U.S. counterterrorism officials to be Usama bin Laden's No. 3 man, is being held in Pakistani custody. Officials hope he can lead them to the elusive Al Qaeda leader.
"This is somebody we watched a lot every single day — he is a very important figure for the Al Qaeda network," Secretary of State Condoleezza Rice (search) said Wednesday after congratulating the Pakistani government.
FOX News confirmed that al-Libbi, a Libyan-born terror suspect who was wanted in two attempts to assassinate President Gen. Pervez Musharraf (search), was arrested earlier this week. A $1 million bounty was put on his capture.
U.S. officials told FOX News that al-Libbi was the most significant Al Qaeda capture since Khalid Shaikh Mohammed was arrested in March 2003, also in Pakistan. Mohammed is being held in U.S. custody at an undisclosed location; he is believed to have masterminded the Sept. 11, 2001, attacks.
Al-Libbi, who likely stepped in for Mohammed after the capture two years ago, "was involved in plotting attacks against the U.S. homeland," an official told FOX News under condition of anonymity.
The Libyan is said to have been a close comrade of bin Laden's since the early 1990s, when they both supported the Taliban in Sudan.
Al-Libbi was being interrogated by Pakistani officials. With regard to bin Laden, an official told FOX News: "It would be right to assume that if he doesn't know the exact whereabouts of UBL [bin Laden], then he knows how to communicate with him."
Officials would not comment on al-Libbi's level of cooperation, but one told FOX News that "a lot is being done to track down others based on al-Libbi's knowledge."
Information Minister Sheikh Rashid Ahmed said the arrest Monday has already produced a treasure trove of intelligence, and predicted more breakthroughs to come.
"This is a very important day for us," Ahmed said. "This arrest gives us a lot of tips, and I can only say that our security agencies are on the right track" in the hunt for bin Laden. "This man knew many people and many hideouts."
A Pakistani intelligence official said 11 more terror suspects — three Uzbeks, an Afghan and seven Pakistanis — were arrested before dawn Wednesday in the Bajor tribal region. The official would not say what prompted authorities to launch the raid, or whether it was linked to al-Libbi's capture.
One counterterrorism official said that al-Libbi, who is married, has at least two children and speaks Farsi and Pashto, as well as limited English and French. He has distinctive attributes, including a skin pigmentation that colors his hands, face and arms with red and white blotches.
President Bush took a break from talking up his Social Security plan on Wednesday to hail the capture as a "victory in the War on Terror."
Al-Libbi's "arrest removes a dangerous enemy who was a direct threat to American and to those who love freedom," Bush said at a talk with Latino small business owners in Washington.
"I applaud Pakistan for their strong cooperation in the War on Terror, and I applaud the government of President Musharraf for acting on solid intelligence to bring this man to justice," Bush said.
Officials told FOX News that U.S. human intelligence in Pakistan contributed "significantly" to al-Libbi's capture. CIA and Pakistani officers had spent months homing in on the accused Al Qaeda leader.
Al-Libbi is believed to have held a significant role in directing operations and global planning. Now that he's been picked out of Al Qaeda, U.S. officials believe there may be a debilitating leadership vacuum in the terror network.
Officials said earlier Wednesday that they were questioning two foreigners on suspicion of links with Al Qaeda (search).
Two security officials who spoke on condition of anonymity said the suspects were captured after a shootout Monday in Mardan, about 30 miles north of Peshawar, capital of the deeply conservative North West Frontier Province.
"They are in the custody of a Pakistani intelligence agency," one official said. He declined to give more details, including the suspects' nationalities.
Villagers in the Mardan suburb of Shahdand Baba told the AP that a small team of Pakistani security agency officers pounced as two men rode by motorbike across a dusty graveyard.
One man was captured quickly, while another, who was dressed in the all-encompassing burqa worn by women in conservative Islamic families, managed to escape temporarily. He fled to a big home of Mardan resident Zakir Khan.
Pakistani intelligence agents "came in through our roof. They told me, 'We are chasing a man who is hiding in your house,'" Khan said. "We gave them permission to come in. One man was hiding in the guest quarters and they found him there. He was a fat man with a long beard and a fair complexion. They arrested him."
It was not clear if the man was al-Libbi or the other suspect, who has yet to be identified.
Al-Libbi is accused of masterminding two bombings against Musharraf in December 2003. The military leader escaped injury but 17 others were killed.
Musharraf, a key ally in the U.S.-led war on terrorism, has said the Libyan was the chief suspect in the bombings against him. Security officials have described Al-Libbi as Al Qaeda's operational commander in Pakistan.
Al-Libbi was among six suspects identified as Pakistan's most-wanted terrorists in a poster campaign last year. A photograph of al-Libbi released by the government Wednesday and taken after his arrest shows a disheveled, bearded man with sunken eyes and what appears to be a skin condition.
It is in striking contrast with the poster photo, in which al-Libbi looks healthy and is dressed in a Western-style suit and tie.
Five dermatologists who viewed al-Libbi's picture said the skin condition looks like vitiligo, which causes skin discoloration from loss of pigment cells. Vitiligo, the same skin condition Michael Jackson has said he has, can occur at any age and is thought to involve a faulty immune system. Skin exposed to the sun is often affected.
FOX News' Catherine Herridge, Bret Baier, Jane Roh and The Associated Press contributed to this report.