Pakistan says the interrogation of the alleged senior al-Qaeda figure, Khalid Sheikh Mohammed, has begun to produce results.

Pakistan's interior minister, Faisal Saleh Hayat, said the suspect is co-operating with interrogators and that his information is being acted upon.

He predicted there would be "significant developments" but gave no details.

On Tuesday, Australia said it also wanted to quiz Sheikh Mohammed in connection with last October's bombings in Bali.

More than 200 people, including 89 Australians, died in the blasts.

Australian Foreign Minister Alexander Downer said the country wanted to find out if he had any links to Jemaah Islamiah, the Asian Islamic group blamed for the Bali bombings.

Sheikh Mohammed, the suspected planner of the 11 September 2001 attacks on the US, was arrested in a joint Pakistani-CIA operation near the capital, Islamabad, at the weekend.

Washington is hoping that the suspect can lead them to Osama Bin Laden and to sleeper cells in the United States.

It has also been suggested that he was involved in the murder of US journalist Daniel Pearl last year.

Experts say the forces hunting Bin Laden will have to move quickly if information from Sheikh Mohammed is to have any value.

Security Alert

Intelligence about his activities was partly behind a decision by the US Government to put the country on the second-highest level of alert last month, Homeland Security Secretary Tom Ridge said.

"Some of the concerns we had that caused us to raise the threat level were attributable to the planning he was involved in," Mr Ridge told the Associated Press.

BBC security correspondent Frank Gardner says Sheikh Mohammed is being jointly questioned by Pakistani and US intelligence officers.

US officials have said they will not torture the suspect.

The Pakistani authorities say they have no plans to hand him over to the Americans and have suggested he might be handed over to Kuwait, his country of origin.

However, the US considers Sheikh Mohammed such a senior figure within al-Qaeda that they will insist on access to him, intelligence sources say.

Sheikh Mohammed's exact whereabouts are not being disclosed, although the Pakistani authorities have insisted that he is still in Pakistan.

"He is very much in Pakistan," Interior Minister Hayat said, describing the arrest as a "big step forward in eliminating al-Qaeda" from his country.

Officials are also trying to identify an Arab man picked up with Sheikh Mohammed.

Senior Operative

Washington has described Sheikh Mohammed as one of al-Qaeda leader Osama Bin Laden's "most senior and significant lieutenants".

Intelligence sources say the successful arrest of the suspect - apparently after telephone intercepts - was a joint operation.

The suspect's capture in a bloodless operation at a suburban house in the city of Rawalpindi prompted joy in the US Government.

"This is a very serious development, a blow to al-Qaeda," White House spokesman Ari Fleischer said on Monday.

President George W Bush had expressed his deep gratitude to President Pervez Musharraf and the Pakistani Government for their efforts in the war against terror and for "their fine work in this most recent success," Mr Fleischer said.

Sheikh Mohammed has long been on the FBI's most-wanted list, and the US had recently increased the reward for his capture to 25m dlr.

On Sunday, his picture on the FBI website showed a red strip over the front marking that he had been located.

Domestic Pressure

BBC Pentagon correspondent Nick Childs says that Bush administration has been under pressure at home from critics who complain it has neglected the hunt for al-Qaeda as it focused on Iraq, and the arrest will take some of that heat off.

Sheikh Mohammed has been indicted in America for plotting to blow up American commercial airliners in the Philippines in the mid-1990s.

Rashid Qureshi, a spokesman for President Musharraf, described the Kuwaiti as "the kingpin of al-Qaeda".

US intelligence agents have been hunting remnants of Afghanistan's former Taleban regime and Osama Bin Laden's al-Qaeda network since the US-led military action in Afghanistan in late 2001.

Hundreds of al-Qaeda militants and former Taleban leaders are thought to have fled into Pakistan since US-led forces launched the strikes following the 11 September attacks.

PHOTO CAPTION

Sheikh Mohammed was captured without a fight in a dawn raid