A mob boss has been arrested in London and is to appear at an extradition hearing, Scotland Yard said on Thursday.

Domenico Rancadore, 64, is understood to have been arrested at a travel agency in the capital. A convicted member of the mafia in Palermo, Sicily, Rancadore is wanted in Italy, where he has been sentenced to seven years in jail.

The Metropolitan police said Rancadore had been convicted in Italy of "participation in the mafia" between 17 December 1987 and 1 April 1995.

Rancadore was arrested on Wednesday evening at a residential address in Uxbridge by officers from the extradition squad under a European arrest warrant issued in January 2012.

Police would not comment on why it had taken so long to carry out the warrant. It is understood he was living under an alias in Uxbridge, using the family name Skinner.

He is in police custody and is due to appear at Westminster magistrates court on Thursday.

Joan Hills, a neighbour, said she knows the family as the Skinners. "I know him very well," she said. "He is one of the best neighbours you could ever have. They have been here for years."

She said Mr "Skinner" and his wife, Anne, had two children who had grown up in the area. She said Mrs Skinner ran a local business. The business, a travel agency called Executive Travel, is registered at the couple's home address in Uxbridge.

Rancadore was living in a modest semi-detached ex-council house in Uxbridge – where three-bedroom properties sell for around £250,000 – around the corner from a Church of England primary school.

In a statement, the Italian interior ministry said Rancadore was a "prominent representative" of the Cosa Nostra, the Sicilian mafia, who had "led a comfortable life" running a travel agency in London.

Rancadore had been on the run since 1994, it added. "Numerous collaborators … have described him as a prominent representative of the Palermo mafia 'family'," the statement said.

During the 1990s, it said, Rancadore had been the head of the Cosa Nostra in the Sicilian town of Trabia.

Reportedly a former PE teacher who continued to take his pension while in London, Rancadore – nicknamed "the professor" – was considered one of the most dangerous Italian fugitives.

In early 2012 the Italian daily La Repubblica reported that his whereabouts in Britain had recently been discovered by police, but that a subsequent extradition request had been denied by the British authorities.

The newspaper quoted a prosecutor in Palermo at the time, Vittorio Teresi, as saying: "The crime of mafia association is not recognised in the British legal system. The extradition request was not even considered."

But in its statement on Thursday, the Italian interior ministry said the arrest had come after British police acted on information from the Italian authorities and police in the southern city of Potenza, which allowed them to identify where he was.

It added: "The operation is the fruit of a significant relationship of international police co-operation ensured by Interpol."

A spokeswoman for the police in Potenza said she could not comment on the reports.