Bangladesh police have arrested a man suspected of murdering two Rohingya leaders in the country's southeast where tens of thousands from the group are living in camps after fleeing persecution in Myanmar, an official said Tuesday.

Dhaka estimates that 400,000 Rohingya refugees are now in Bangladesh, with 70,000 arriving since October when Myanmar security forces launched a brutal crackdown on the minority group in neighbouring Rakhine state in response to militant attacks on police posts.

Dost Mohammad, a 32-year-old Rohingya man, was arrested Sunday from one of the many squalid camps in Bangladesh's coastal district of Cox's Bazar, which borders Rakhine and where thousands of the ethnic Muslim minority now live in grinding poverty.

Police said Mohammad was caught at Nayapara camp in possession of firearms, ammunition and drugs after a long manhunt.

"He is a key suspect in the murder of two refugee leaders," local police chief Mainuddin Khan told AFP.

The arrest comes amid reports that young Rohingya in the Bangladeshi camps are trying to join insurgents in Myanmar.

A Rohingya shopkeeper in Nayapara told AFP on condition of anonymity that Mohammad and his group fought with others in the camps.

"They are like a bunch of hooligans. Many say they are members of RSO," he said, referring to a Rohingya insurgent group who were active in the Bangladeshi Rohingya refugee camps in the early 1990s but are now widely considered defunct.

Other community leaders described Mohammad as "short tempered" but said the murder allegations were "baseless".

"His father lives in Saudi Arabia, and sister in Australia. They regularly send him money, he didn't work. He quarrelled with others in the camp," said Mirza Ghalib, a Rohingya refugee from the Nayapara camp.

"But killing someone or possessing illegal weapons is an unbelievable accusation against him."

Local law enforcement often blames the Rohingya for crimes including drug trafficking.

Police arrested several Rohingya men over an attack on a police checkpoint in Bangladesh last year when the commander of the checkpoint was killed.

Bangladesh has floated the idea of relocating tens of thousands of Rohingya refugees to a remote island off its coast, despite opposition from rights groups.