Al-Qaeda in Saudi Arabia vowed to continue its holy war to overthrow the ruling monarchy and eject Westerners from the region even as it acknowledged its alleged leader had been killed shortly after beheading an American hostage.

After initial denials, a statement posted Saturday on an Islamic Wed site confirmed that Abdulaziz al-Muqrin and three other militants has been killed the night before in a shootout with Saudi security forces.

It said the four were killed "when the soldiers of the tyrants [the government] set up a trap for them."

The defiant statement pledged to continue al-Qaeda's fight. "The mujahedeen are continuing the jihad that they have pledged to God and the killing of their brothers will not weaken their resolve but only increase their determination and commitment," it read.

It followed claims by the Saudi government that the killings represented a major victory of al-Qaeda.

The Saudis are keen to prevent an economically and politically damaging exodus from the kingdom of foreign workers. Many of these have grown increasingly nervous after a series of atrocities targeting expatriates.

There are an estimated 40,000 Americans, Britons and Canadians alone in Saudia Arabia—many in key positions.

Saudi foreign policy advisor Adel al-Jubeir told reporters the killing of Abdulaziz al-Muqrin had "substantially weakened" the terror network in Saudi Arabia.

Al-Muqrin, though only 31 years old, reportedly had been a disciple of Osama bin-Laden for 16 years, fighting in Afghanistan and a series of other hot spots attracting Islamic militants.

Al-Jubeir said the people of Saudi Arabia were "outraged" by the recent terror acts of al-Qaeda in the country, including the beheading of the 49-year-old American defence contractor Paul Johnson.

Johnson worked on Apache attack helicopter systems in Saudi Arabia for Lockheed Martin.

Earlier on Saturday Saudi television showed pictures of four bodies authorities identified as al-Qaeda's leader in the kingdom and three other prominent militants.

The militant's statement confirmed three militants who died alongside al-Muqrin were Faisal Abdul-Rahman al-Dikheel, Turki bin Fuheid al-Muteiry and Ibrahim bin Abdullah al-Dreiham.

Al-Jubeir said al-Dikheel was believed to be the No. 2 al-Qaida militant in Saudi Arabia.

Officials also said 12 other militants were arrested and weapons, forged papers and cars seized.

Reports also linked another militant to the October 2000 attack on the destroyer U.S.S. Cole in the Yemeni port of Aden, which killed 17 sailors.

And one of the cars may have been used in an attack that killed a BBC cameraman almost two weeks ago, officials said.

Accounts of Friday night shootout sketchy

The exact circumstances of the firefight remain unclear.

On Friday night Al-Arabiya television reported that al-Muqrin and two other militants were killed in the Malazz district of Riyadh shortly after murdering Johnson and while disposing of his body.

This account was eventually confirmed by Saudi officials following conflicting other initial reports that the shootout had taken place outside Riyadh.

Johnson's body, however, has still not been recovered.

A reported 15,000 security forces had been searching the Saudi capital Riyadh all week for the extremists' hiding place, in an attempt to rescue Johnson.

The militants had demanded all al-Qaeda prisoners in the kingdom should be freed by Friday or the Amercian would die.

Johnson had been abducted almost a week earlier, on Saturday — the same day another American was shot dead by alleged al-Qaeda extremists in the Malazz neighbourhood.