Information Minister Sheikh Rashid Ahmed said that Libbi had been captured in the past few days.
He was held with at least five other foreign al-Qaeda suspects in a clash in Waziristan in North-West Frontier Province, security sources said.
Libbi is said to have become third in the al-Qaeda hierarchy after Khalid Sheikh Mohammed was caught in 2003.
Mr Ahmed said security agents had already gathered "a lot of tips" from the arrested men which meant they were "on the right track" to eventually capturing al-Qaeda head Osama Bin Laden.
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What is al-Qaeda?Libbi is wanted in connection with two attempts on the life of Pakistan's President Pervez Musharraf in December 2003 in which 17 people died.
He was also regarded as the prime suspect in a number of bombings in Pakistan, including an attempt last year to kill Prime Minister Shaukat Aziz.
Pakistan had put a reward of 20m rupees ($340,000) on the head of Libbi in August last year. The US had put up a bounty of $5m.
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 The head has been chopped off - he was one of the most senior al-Qaeda operatives in Pakistan  Senior security official
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"This is a very important day for us," Mr Ahmed said.
Two Pakistani security officials told the Associated Press the men were held after a gun battle in Mardan, 50km (30 miles) north of Peshawar, capital of North-West Frontier Province.
A senior security official told the AFP news agency: "It is a very big success because he was the hand who was moving all the terrorist puppets in the country."
US custody
Libbi reportedly took over Khalid Sheikh Mohammed's role after the latter was transferred into US custody.
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PAKISTAN'S KEY ARRESTS
 Khalid Sheikh Mohammed, above, Rawalpindi, March 2003
Omar Saeed Sheikh, February 2002
Abu Zubaydah, Faisalabad, March 2002
Ramzi Binalshibh, Karachi, September 2002
Naeem Noor Khan, Lahore, July 2004
Khalfan Ghailani, July 2004, Gujrat
Amjad Hussain Farooqi - shot dead in September 2004
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He was allegedly al-Qaeda's number three after Osama Bin Laden and Egyptian Ayman al-Zawahri.
Khalid Sheikh Mohammed has claimed he had the idea for the plane-based attacks on New York and Washington on 11 September, 2001.
Libbi appeared on a most-wanted list last year, along with Amjad Hussain Farooqi, who was killed in a battle with forces in southern Pakistan last September.
Farooqi was also accused of involvement in the assassination attempts.
Pakistan has been a key ally in what the US calls its war on terrorism.
Islamabad has handed over more than 700 suspected al-Qaeda operatives to US custody.
One was Tanzanian Ahmed Khalfan Ghailani, a key suspect in the bombings of two US embassies in East Africa in 1998, whose transfer was announced in January this year.