BAGHDAD, (Reuters) – Al Qaeda leader in Iraq Abu Musab al-Zarqawi, blamed for the beheading of foreign captives and the death of hundreds in suicide bombings, has been killed in a raid north of Baghdad, Iraq’s prime minister said on Thursday.

Jordanian-born Zarqawi, who had sworn loyalty to Osama bin Laden, had come to symbolise the radical Islamic insurgency against U.S. occupation in which thousands had been killed. His campaign is also believed to have played a major role in inflaming Sunni-Shi’ite tensions in the country.

U.S. officials in Iraq hailed his killing, but warned that Zarqawi’s followers still posed a security threat to the Iraq government.

British Prime Minister Tony Blair said Zarqawi’s death was a blow against al Qaeda everywhere.

“Today Zarqawi has been terminated,” Iraqi Prime Minister Nuri al-Maliki announced at a televised news conference attended by the top U.S. commander in Iraq, General George Casey, and other senior officials.

“Every time a Zarqawi appears we will kill him,” Maliki said. “We will continue confronting whoever follows his path. It is an open war between us.”

Casey said the body of Zarqawi, who had a $25 million U.S. bounty on his head, had been identified and that details of his death would be revealed later on Thursday.

Maliki, who had been desparately in need of a success to bolster his authority, said seven Zarqawi aides were also killed in the raid in the city of Baquba 65 km (40 miles) north of the capital.

U.S. Ambassador Zalmay Khalilzad said Zarqawi’s death marked a “great success”. But the ambassador and Casey cautioned that it will not end violence in the country.

The announcement of Zarqawi’s death had an impact on oil prices. Crude futures were down more than one dollar to $69.82.

Zarqawi, believed to be in his late 30s, has inspired an apparently endless supply of militants from across the Arab world to blow themselves up in suicide missions in Iraq.

Iraqi and U.S. officials say he has formed a loose alliance with Saddam Hussein’s former agents, benefiting from their money, weapons and intelligence assets to press his campaign.

Some posters of the most wanted man in Iraq show him in glasses, looking like an accountant, others as a tough-looking man in a black skullcap.

Zarqawi’s killing could be seen as one of the most significant developments for the United States forces and the Iraqi government it backs since the capture of Saddam.

Zarqawi appeared on a video in April unmasked for the first time, meeting his followers, firing a machinegun in the desert and condemning the entire Iraqi political process.

“Zarqawi didn’t have a number two. I can’t think of any single person who would succeed Zarqawi…In terms of effectiveness, there was no single leader in Iraq who could match his ruthlessness and his determination,” said Rohan Gumaratna from the Institute of Defence and Strategic Studies in Singapore.

The killing of Zarqawi could give a political boost to Maliki, who has pledged to crush the Sunni Arab insurgency against the U.S.-backed government.

Iraq’s parliament approved on Thursday Maliki’s candidates for new defence and interior ministers.

By a clear majority, it approved Jawad al-Bolani, a Shi’ite, as interior minister and General Abdel Qader Jassim, a Sunni and until now Iraqi ground forces commander, as defence minister.

Out of 198 deputies present in the 275-seat assembly, 182 voted for Bolani while 142 supported Jassim, the speaker said.

The two key security jobs were left temporarily vacant when Maliki’s government of national unity took office on May 20 because of intense wrangling among his coalition partners.

Parliamentary approval for any candidates Maliki offers could help pull him out of a political crisis that has hurt efforts to impose a security crackdown against a Sunni Arab insurgency and sectarian violence raising fears of civil war.