US troops captured an unkempt Saddam Hussein hiding "like a rat" in a hole near his home town without a shot being fired.

US President George W. Bush yesterday hailed the arrest as the end of a painful era for Iraq.

"We got him... The tyrant is a prisoner," Washington's Iraq governor Paul Bremer jubilantly told a Baghdad news conference.

Cheering Iraqi journalists shouted "Death to Saddam!" One, who had been tortured in Saddam's jails, broke down in tears.

Saddam, who had urged his troops to go down fighting the US-led invaders, had a pistol but the US military said he put up no defence when found in a small, dark pit covered with polystyrene and a rug behind a farm building near Tikrit.

Major-General Ray Odierno told a news conference in Tikrit that Saddam, 66, who had been on the run since he was toppled in April, was "very disorientated" when he was found by troops during a raid at a farm at Ad-Dawr late on Saturday.

"He was just caught like a rat," Mr Odierno said in one of Saddam's palaces nearby. "It is rather ironic that he was in a hole in the ground across the river from these great palaces he built where he robbed all the money from the Iraqi people."

Saddam's capture, which triggered celebratory gunfire across Iraq, was a major coup for Mr Bush, facing a campaign for re-election that was imperilled by military casualties in Iraq.

"It marks the end of the road for him," Bush said in a televised address, adding Saddam would "face the justice he denied to millions".

Mr Bush told the Iraqi people: "You will not have to fear the rule of Saddam Hussein ever again" - but he warned it would not mean an immediate end to attacks that Washington has blamed on Saddam's supporters and foreign Islamic militants.

A US military video showed Saddam, who faces a trial for his life before an Iraqi tribunal, looking haggard and sporting a bushy black and grey beard, meekly undergoing a medical examination after eight months on the run.

US forces are holding Saddam at an undisclosed location. In the latest violence, a suspected suicide car bombing killed at least 17 people at a police station in Khalidiyah, west of Baghdad, and a US bomb disposal expert was killed as he tried to defuse a device.

But news of Saddam's capture was welcomed by leaders around the world and boosted the US dollar by one per cent against the euro and half a per cent against the yen when the first markets opened today in Asia.

In Baghdad, Hamid, a baker, said: "Most of my family are either dead or were forced into the army because of Saddam. Every Iraqi should have the right to reclaim justice from him."

The US commander in Iraq, Lieutenant-General Ricardo Sanchez, described Saddam as "talkative". That could give US officials vital intelligence on his alleged banned weapons.

Adnan Pachachi, a senior member of the US-backed Iraqi Governing Council who spoke to Saddam in custody, said: "He seemed rather tired and haggard but he was unrepentant and defiant at times... He tried to justify his crimes."

Iraqi and US officials said some $750,000 in $100 bills was found near the rat-infested, camouflaged "spider hole", close to the Tigris riverbank. Saddam had probably not been there long, Mr Odierno said. Two other men, two rifles and a taxi were also seized in what US forces called Operation Red Dawn.

Governing Council members said Saddam faces trial under a tribunal agreed with Washington only last week. He may risk the death penalty as he answers for a three-decade reign of terror and for leading his oil-rich nation into three disastrous wars.

"We want Saddam to get what he deserves. I believe he will be sentenced to hundreds of death sentences at a fair trial because he's responsible for all the massacres and crimes in Iraq," said Amar al-Hakim, a leader of the powerful Shi'ite party, the Supreme Council for the Islamic Revolution in Iraq.

US officials say anti-American Muslim militants affiliated to Osama bin Laden's al Qaeda network have become active in Iraq amid the chaos after Saddam's ousting on April 9.

US officials will hope to extract intelligence on alleged nuclear, chemical and biological weapons which Mr Bush used to justify waging war on Iraq in defiance of many UN allies.

Little evidence of banned weapons has been found, helping fuel international wrangling over instability in Iraq, American motives in the war and the cost of rebuilding a country that holds the world's second biggest oil reserves.

French President Jacques Chirac, and German and Russian leaders, all fierce critics of Mr Bush's war, welcomed the arrest.

In the Arab world, there were mixed feelings, with many ordinary people welcoming the final humiliation of a man who had invaded Iran and Kuwait, oppressed Iraq's Shi'ite majority and ordered gas attacks on Kurdish villages.

In Kurdish areas, there was wild celebration. But there was virtual silence in his old Sunni Muslim power base of Tikrit.

"He looked barbaric, like a beast. They humiliated him the same way he humiliated others," said Fouad Saleh, a financial consultant in Dubai. "The tyrant got his punishment in the end."

Some Arabs elsewhere regretted the role the US occupiers played and lamented the passing of a defender of Arab interests. Some Palestinians recalled Saddam's missile strikes on Israel during the 1991 Gulf War as one of his greatest achievements.

The capture of Saddam, number one on a US wanted list, was in stark contrast to the bloody end of his sons, Uday and Qusay, who died with guns blazing in July.

Their father kept up a series of taped appeals to his followers after that. But a huge manhunt and a $25 million price on his head must have cramped any role in the guerilla war. It was unclear if any bounty would be paid for his capture - US forces paid out $30 million to a man over his sons.

A US official said an Iraqi prisoner provided the initial tip on Saddam. Iraqi officials said Kurdish forces were involved in running him to ground though not involved in the arrest.

It was a humiliating end for a man who ruled Iraq for three decades after humble beginnings in a village on the Tigris just outside Tikrit. Clan connections in the Sunni-dominated military and a taste for street violence took Saddam to the top of the Arab nationalist Ba'ath party that seized power in a 1968 coup.

He crushed all opposition and lavished huge amounts of Iraq's oil wealth on marble-lined palaces and massive monuments to himself. Many palaces are now barracks for US troops.