"Justice has been done," U.S. President Barack Obama declared in a dramatic televised address late Sunday, sparking raucous celebrations across the United States, after an operation that officials said lasted less than 40 minutes.

The carnage rained down on New York and Washington by hijacked passenger planes in September 2001 set in train war in Afghanistan against bin Laden's Taliban protectors and a decade of tumult as the United States then went to war in Iraq.

World leaders welcomed the news of bin Laden's killing but warned that al-Qaida's willingness to wreak havoc was undimmed and that the possibility of reprisal attacks meant vigilance was more important than ever.

Pakistan's main Taliban faction Monday threatened to attack Pakistan and the United States, calling them "the enemies of Islam".

Speaking by telephone from an undisclosed location, spokesman Ehsanullah Ehsan also told Agence France Presse: "If he has become a martyr, it is a great victory for us because martyrdom is the aim of all of us."

An Internet outlet for official al-Qaida messages accepted its leader's killing and eulogized him as a "knight" who sacrificed his soul and money to fight the United States, monitoring group SITE said.

Obama said he had directed U.S. armed forces to attack a heavily-fortified compound in the Pakistani garrison town of Abbottabad, less than two hours' drive north of Islamabad, after a tip-off that first emerged last August.

"A small team of Americans carried out the operation with extraordinary courage and capability," the president said. "After a firefight, they killed Osama bin Laden and took custody of his body."

Bin Laden's body was quickly buried at sea, U.S. officials said. "We wanted to avoid a situation where it would become a shrine," one said.

Footage taken by the U.S. network ABC inside the Abbottabad house showed blood on the floor in one room and broken computers in another, stripped of their hard drives.

Explosions, helicopters clattering overhead and gunfire tore locals from their sleep as they stumbled out of their homes to see what was going on, residents said.

Ejaz Mahmoud, an Abbottabad tailor, said he heard a blast in the early hours and "saw a fireball coming down from the air".

One helicopter in the raid went down due to "mechanical failure" but was blown up by its crew, who left the compound along with the assault force on another chopper, a U.S. official said.

Residents were stunned when they switched on their television sets after daybreak to hear Obama announce that bin Laden had been killed in their home town, which was soon engulfed by a heavy Pakistani security presence.

"We heard ambulance sirens and security people shouting. We saw fire and flames coming out ... Everybody is scared," according to another resident who was too frightened to give his name.

Senior U.S. officials said two brothers believed to be bin Laden's couriers and one of his adult sons were also killed in the raid, while a woman who was used as a human shield perished.

Officials said they were stunned when intelligence reports first revealed the elaborate security at the compound where bin Laden was hiding, with four-to-six meter high walls topped with barbed wire.

"Everything we saw, the extremely elaborate operational security, the brothers' background and their behavior, and the location and the design of the compound itself, was perfectly consistent with what our experts expected bin Laden's hideout to look like," one senior U.S. official said.

Until now, bin Laden had always managed to evade U.S. forces, despite a $25 million reward on his head, and was most often thought to be hiding in the unruly area on the Afghan-Pakistani border.

His presence in Abbottabad -- a leafy town that is home to an elite Pakistani military academy -- raised new questions about the Islamabad government's zeal for prosecuting the war on terror alongside Washington.

U.S. officials made clear that Pakistan was not informed about the operation in advance, and Islamabad authorities had nothing to say in response to the killing for four hours before a carefully worded statement.

Asked in an AFP interview about the extent of Pakistani cooperation, Prime Minister Yousuf Raza Gilani said: "I don't know the details, I don't know minute details, but in short we have intelligence cooperation."

He described bin Laden's death as a "great victory".

"We will not allow our soil to be used against any other country for terrorism and therefore I think it's a great victory, it's a success and I congratulate the success of this operation," Gilani said.

But leaders in both Afghanistan and India pointed the finger of blame at Pakistan, saying that bin Laden's discovery and death so close to Islamabad vindicated their claims of double-dealing by their nuclear-armed neighbor.

George W. Bush, who was U.S. president at the time of the 9/11 attacks when about 3,000 people died, said bin Laden's death was a "victory for America" and congratulated Obama and U.S. intelligence and military forces.

"The fight against terror goes on, but tonight America has sent an unmistakable message: No matter how long it takes, justice will be done," Bush said.

In a spontaneous eruption of joy, thousands gathered outside the gates of the White House, cheering, waving U.S. flags and shouting "USA, USA". Another large crowd gathered at Ground Zero in New York, singing "God Bless America".

Share prices rallied worldwide on the news and the U.S. dollar rose on currency markets.

French President Nicolas Sarkozy congratulated the United States for its "tenacity" in hunting down bin Laden and British Prime Minister David Cameron said his death would bring "great relief" to people worldwide.

But as the U.S. State Department warned of the potential for reprisal attacks against Americans around the globe, Sarkozy stressed: "The scourge of terrorism has suffered a historic defeat but it's not the end of al-Qaida."

CIA director Leon Panetta warned that terrorist groups "almost certainly" would try to avenge bin Laden.

Iran meanwhile said bin Laden's death had removed "any excuse" for the United States and its allies to deploy forces in the Middle East under the pretext of fighting terrorism.

Born in Riyadh in 1957, bin Laden was the son of a construction tycoon whose riches enabled the future al-Qaida leader to fund Islamic fighters waging war against the Soviet occupiers of Afghanistan in the 1980s.

He went on to build a many-tentacled extremist group that earned global notoriety by bombing U.S. embassies in East Africa in 1998.

But both in 1998 and after 9/11, bin Laden was unrepentant about what he called his divinely ordained mission against the United States and Israel.