A senior al Qaida leader has reportedly been killed in a late-night drone strike that hit his home in Libya's remote south.

The strike was suspected to be the work of a Western military but a Pentagon spokesman denied it was carried out by the United States.

The Lana news agency said that Abu Talha al-Hassnawi, a key figure in al Qaida's North African affiliate, was killed in his house in Sabha late on Monday.

According to the agency, al-Hassnawi was previously a leading member of al Qaida's affiliate in Syria, and was a leading recruiter of fighters heading to fight in Syria's vicious and complex conflict that has seen rival al Qaida and Islamic State militants battle each other.

Al-Hassnawi was also purportedly close to a top militant once considered the most dangerous man in the Sahara - the one-eyed terror leader Mokhtar Belmokhtar, a former member of al Qaida's North Africa branch - and has been seen in his company in the past.

Lana also said that al-Hassnawi had fled to Sabha from the northern coastal city of Sirte, where Libyan militias and forces loyal to the UN-brokered government in the capital, Tripoli, are battling the Islamic State affiliate with the help of US air strikes.

Libya is split between two rival governments, the UN-backed one in Tripoli and its rival, based in the country's east. Lana, which reported al-Hassnawi's death, is affiliated with the east-based government.

A resident who lives near Sabha said the strike took place at 11.15pm on Monday and that it targeted a house the Gurtha Shati village on Sabha's outskirts.

The attack left seven bodies completely charred so it was impossible to identify al-Hassnawi, he added.

The locals knew that the al Qaida leader had been in the house but "no one can tell who is who" among the bodies, the witness said.

The witness also said he had seen al-Hassnawi together with Belmokhtar, whom a US drone strike in the eastern Libyan town of Adjabiya failed to kill last year, and that the two "came back from the fighting in Sirte".

It was not immediately possible to verify his account and local officials could not be reached for comment.

In Washington, Pentagon spokesman Navy Captain Jeff Davis said the Libya strike was not carried out by the United States.

The US Treasury Department designated Belmokhtar as a foreign terrorist in 2003.

Prosecutors said he was a key leader of al Qaida's efforts in North Africa starting in 2008 as he led attacks that resulted in the kidnapping and murder of numerous individuals.

There is a five million dollar (£4 million) reward for information leading to his capture.

Believed to be 43 years old, Belmokhtar has also been dubbed "the one-eyed sheikh" after losing an eye in combat.

One of his aliases was "Mr Marlboro" because he was accused of smuggling cigarettes through the Sahara and the Sahel regions in Africa.

He is accused of participating in a January 2013 attack on a Western-owned gas processing facility in a remote part of eastern Algeria near the border with Libya.

After a four-day stand-off, the Algerian army moved in and killed 29 attackers and captured three others. At least 37 hostages, including one Algerian worker, died in the battle.

The US has closely monitored movements of Islamic State and al Qaida militants in Libya, and small teams of US military personnel have moved in and out of the country.

Last November, a US air strike in the eastern city of Darna killed Islamic State leader Abu Nabil or Wissam al-Zubaydi, an Iraqi national.

British, French and Italian special forces have also been in Libya, helping with aerial surveillance, mapping and intelligence gathering in several cities, including Benghazi in the east and Zintan in the west.

Libya has been plagued by chaos since the civil war in 2011, which drew in US and European air strikes that helped topple long-time dictator Muammar Gaddafi.

AP