Masri is believed to have formed al-Qaeda's first cell in Baghdad
The United States military in Iraq says a man detained in the northern city of Mosul is not in fact the leader of al-Qaeda in Iraq.
An earlier statement from the Iraqi defence ministry said that al-Masri had been captured.
But an American military spokeswoman, Peggy Kageleiry, said Abu Ayyub al-Masri had not been arrested.
She said confusion had arisen because a man with a similar name to the al-Qaeda in Iraq leader had been detained.
Al-Qaeda in Iraq has been blamed for or has claimed responsibility for some of the bloodiest insurgent attacks in Iraq since the US-led invasion in 2003.
Members of al-Qaeda are believed to have regrouped in the northern city since the beginning of the US troops "surge" last year.
Al-Masri is believed to have helped Abu Musab al-Zarqawi form the first al-Qaeda cell in Baghdad. Zarqawi was killed in June 2006.
In April 2007, he was named "minister of war" in the 10-man cabinet of the Islamic State of Iraq, an umbrella organisation of Sunni militant groups.
An Iraqi Defense Ministry spokesman said that the leader of al-Qaeda in Iraq, Abu Ayyub al-Masri, was arrested Thursday. Al-Masri, also known as Abu Hamza al-Muhajir, was reportedly arrested in the northern city of  Mosul, 225 miles northwest of Baghdad.


There has been no official confirmation or comment from United States forces yet, but news of the arrest was reported on Iraq state television. 

The Iraqi Defense Ministry spokesman, Mohammed al-Askari, told the Associated Press via telephone that, "The commander of Ninevah military operations informed me that Iraqi troops captured Abu Hamza al-Muhajir the leader of al Qaeda in Iraq."

Al-Masri, an Egyptian-born militant, took control of Al Qaeda operations in Iraq after former leader Abu Musab al-Zarqawi was killed on June 7, 2006 in an airstrike northeast of Baghdad.

Major Gen. Abdul-Karim Khalaf, an Interior Ministry spokesman, said that police in Mosul "arrested one of al Qaeda's leaders at midnight and during the primary investigations he admitted that he is Abu Hamza Al-Muhajir. Now a broader investigation of him is being conducted."