The announcement came days after Pakistani army officers agreed to pull their troops out of the North Waziristan region as part of a 'peace deal' with the Taliban, ABC said.

In a telephone interview with ABC News, Major General Shaukat Sultan Khan, press secretary to Pakistan's President Pervez Musharraf [Images], said if bin Laden is in Pakistan, he 'would not be taken into custody, as long as one is being like a peaceful citizen.'

However, in response to a telephone query by rediff.com contribuor in Islamabad Mohammad Shehzad, General Sultan denied having said this.

"No, it is not correct. I have not said it. They talked to me in the context of a peace deal in North Waziristan. They have tried to apply the same on bin Laden which is incorrect," he said.

While bin Laden's precise location is unknown, most analysts believe he is hiding somewhere in the tribal areas of Pakistan near the Afghanistan border.

ABC says the 'peace agreement,' signed on the same day President George W Bush [Images] said the US was working with its allies 'to deny terrorists the enclaves they seek to establish in ungoverned areas across the world,' also calls for the release of Taliban prisoners and weapons captured from the radical outfit by Pakistani security forces.

The Pakistan army has faced a series of humiliating defeats at the hands of Al Qaeda and the Taliban when it entered Waziristan under American pressure.

'What this means is that the Taliban and Al Qaeda leadership have effectively carved out a sanctuary inside Pakistan,' said ABC News consultant Richard Clarke, the former White House counter-terrorism director.

'They're throwing the towel,' ABC quoted Alexis Debat, senior fellow at the Nixon Center and an ABC News consultant, as saying. 'They're giving Al Qaeda and the Taliban a blank check and saying essentially make yourselves at home in the tribal areas.'

More news from Pakistan