Pakistani troops involved in the operation to flush out militants holed up in the Lal Masjid in Islamabad have located radical cleric Abdul Rashid Ghazi and have given him an ultimatum to surrender.

"Ghazi has been located in a basement of the mosque along with some militants. He has been given an ultimatum to surrender," Defence spokesman Waheed Arshad told reporters in Islamabad on Tuesday.

The deputy administrator of the mosque was found in the southern portion of the mosque complex, where his house is also situated.

After 11 hour-long talks on Monday night, the 13-member committee headed by former premier Shujaat Hussain reached an agreement on the terms and conditions for Ghazi and his associates to give up their arms and come out of the besieged complex, Religious Affairs Minister Ijazul Haq said.

As per the "agreement", Ghazi and his family had agreed to be put up in a rest house under "house arrest" and face legal proceedings in the cases related to him.

The negotiations were conducted through a cellular phone given to Ghazi by the negotiators as both sides preferred not to meet directly due to security reasons.

The radical cleric had also agreed to face legal proceedings as the Supreme Court on Monday took suo moto notice of the incident and ordered that any surrender be done before the sessions judge of Islamabad, Haq told reporters.

Lal Masjid: Chronology of events

An understanding had been reached with Ghazi that all militants, who were with him would be screened and released if they were not wanted by security forces.

For this 10 buses were ordered and a place had been prepared for their stay, Haq, said.

However, after reaching an understanding on all issues, Ghazi sought to know the fate of foreign ultras. He was then told that they would have to face legal proceedings and no free passage would be given to them.

When the government insisted that foreign militants should surrender, Ghazi said he would call back but the call never came and he switched off the phone.

This prompted Hussain to declare failure of the talks and led the government to storm the complex to save women and children holed up there, the minister said. The two sides had also decided that the boys and girls' madrassa administered by Lal Masjid would be given to Wakaful Madaris, an umbrella body of madrassas in Pakistan whose leader Hanif Julandhari was also part of the delegation that negotiated with Ghazi.

However, some of the clerics, who accompanied Hussain later told reporters that differences arose because the draft of the agreement was altered after it was presented to President Pervez Musharraf [Images]. But Hussain dismissed it saying it was only change of "legal terms" not the conditions.

Ghazi had his own version to tell to the media. Minutes before the operation began, he used the mobile phone given to him and spoke to local TV channels to say he has agreed to all terms but the talks broke down when he insisted that he would give up in front the media and a delegation of clerics. He said he wanted the media to visit the complex to prove his point that there were no major weapons, nor foreigners present with him as claimed by the government.

But his proposal was shot down. He also vented his anger against Hussain and Haq, saying they should not be "spared" as they along with certain clerics played a "dirty role".