Canadian intelligence officers believe an Algerian man arrested in the capital Ottawa last week is connected with Osama Bin Laden's al-Qaeda network, reports say.

They say Mohamed Harkat, a 34-year-old immigrant, is associated with one of Bin Laden's top lieutenants, Abu Zubaydah, according to the Canadian Security and Intelligence Service (CSIS).

Abu Zubaydah is under interrogation

Abu Zubaydah was arrested in Pakistan in March and is being questioned by US intelligence agents.

A CSIS file quoted by Canada's Globe and Mail newspaper on Tuesday describes Mr Harkat as "a member of the Bin Laden network" who used his jobs at a car service station and pizza outlet as cover.

The CSIS file says an al-Qaeda sleeper cell is believed to be operating in Canada, consisting of extremists who "have the capability and conviction to provide support for terrorist activities in North America".

Al-Qaeda was blamed for the 11 September attacks in New York and Washington.

Alleged links

Surveillance of Mr Harkat reportedly began after he and a companion were spotted taking pictures of the parliament buildings and supreme court from a car.

Ahmed Ressam: Accused of trying to bomb LA airport

According to the Globe and Mail, The CSIS believes Mr Harkat trained in the same camp in Afghanistan as another terror suspect, Ahmed Ressam, an Algerian man accused of plotting a terrorist attack during the US Millennium celebrations.

Ressam was arrested in December 1999 while trying to enter the United States from Canada with a carload of explosives, bound for Los Angeles airport.

The CSIS files reportedly say Mr Harkat arrived in Canada in 1995 from Malaysia carrying two passports - one issued by Algeria in his own name and the other a fake Saudi one bearing the name Mohamed S Mohamed.

Mr Harkat was granted refugee status in 1997 after claiming that he faced persecution at the hands of the Algerian Government.

The CSIS says Mr Harkat earlier had links with the militant Algerian Armed Islamic Group (GIA), which has been blamed for several terror attacks outside Algeria.

"The Service believes that Harkat has assisted some Islamic extremists who have come to Canada," the CSIS file says.

His lawyer, Bruce Engel, rejected the allegations.

"He categorically and unequivocally denies any involvement, association - direct or indirect - with any terrorist organisation," he said after visiting Mr Harkat in detention.