Serbian police arrested Prime Minister Zoran Djindjic's suspected assassin, a senior member of a battle-hardened special police unit set up during the rule of Slobodan Milosevic, the government said yesterday.

It was the most dramatic development yet in the massive hunt for the Serbian crime bosses held responsible for the March 12 killing of the reformist leader, which sparked fears of renewed instability in the Balkans.

New Prime Minister Zoran Zivkovic, a close ally of Djindjic, identified the suspect as Zvezdan Jovanovic and said he was a deputy commander of the elite Unit for Special Operations (JSO).

The crack division saw action in the Balkan wars of the 1990s under Milosevic, then Yugoslav president, now standing trial at the UN war crimes tribunal in The Hague.

The government has named the unit's former commander Milorad Lukovic, also known as Legija, as one of the crime gang leaders believed to have planned the assassination. He and other alleged ringleaders remain at large.

Djindjic, who played a key role in the ouster of Milosevic in 2000 and enraged nationalists by sending him to The Hague the following year to stand trial, was shot dead by a sniper outside the main government building in Belgrade.

Djindjic fought to transform the impoverished republic from an international pariah to a Western-style democracy, and vowed to clamp down on the organised crime that flourished during Milosevic's turbulent decade in power.

The government swiftly accused a powerful criminal group linked to Milosevic-era state security officials and led by Legija and others of organising the killing in a bid to spread chaos in Serbia.

Catching the assassin would be a major breakthrough for the authorities, who launched a sweeping crackdown on crime after Djindjic's murder almost two weeks ago.

"Police have identified the person whom they have the well-founded suspicion fired at late Prime Minister Zoran Djindjic," Zivkovic said in a brief statement.

"He was arrested yesterday and has been detained for further investigation," said Zivkovic, who took office last week.

He said another JSO member had been arrested on suspicion of involvement in the murder and its commander had been removed from his position and detained because of connections with the crime group behind the killing, known as the Zemun gang.

Zivkovic also said police had found what they believed was the murder weapon, a Heckler Koch G3 sniper rifle.

The JSO mounted a week of protests in 2001 including blocking roads with armoured cars, complaining they had been manipulated into arresting two Serb war crimes suspects.

The government declared a state of emergency after Djindjic's assassination, giving police extra powers to hold people and raid houses, and the police have since detained more than 1,000 people in their war on organised crime. The government has described the Zemun gang, named after a Belgrade municipality, as part of one of the largest organised networks of cocaine and heroin dealers in the world.

"The investigation does not end here. We are satisfied with it, but it will be concluded only after all those involved in the murder have been arrested and brought before justice," Zivkovic said.

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