Radical cleric threatens suicide attacks, sets up Islamic court in Pakistani capital
Pakistani rebel cleric 'killed'
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'Asked to come out'
Interior Ministry spokesman Javed Iqbal Cheema said Mr Ghazi was killed as troops were flushing out militants still inside a madrassa (religious school) for women and girls inside the mosque compound.
"He was spotted in the basement and asked to come out. He came out with four or five militants who kept on firing at security forces," Mr Cheema told the AFP news agency.
"The troops responded and in the cross-fire he was killed.
"There are still certain areas to be cleared. The body is in the compound. The other militants were also killed in the fighting."
Brig Cheema said Mr Ghazi had used a number of women and children as "human shields", although the cleric always denied taking anyone hostage.