By Michael Bristow
BBC News, Beijing
Mr Liu has been a political activist for more than two decades
One of China's most prominent political activists has been formally arrested for inciting subversion.
Liu Xiaobo is accused of spreading rumours and defaming the government, according to China's state-run Xinhua news agency.
Mr Liu's arrest comes six months after he was taken into custody.
He was detained just before the publication of a document that he co-authored calling for political change in China.
There has been constant speculation about Mr Liu's fate ever since he was taken from his home late at night last December.
That has now ended with the announcement from Beijing's public security bureau that the activist has been formally arrested.
"[Mr] Liu has been engaged in agitation activities, such as spreading of rumours and defaming of the government, aimed at subversion of the state and overthrowing the socialism system in recent years," the bureau told Xinhua.
It added that Mr Liu, a writer as well as an activist, had confessed to the charge in an initial police investigation.
Mr Liu's wife, Liu Xia, has been informed of the arrest, the detained activist's lawyer Mo Shaoping told the BBC.
The lawyer has not been able to see his client since his arrest, but hopes to do so within the next 48 hours.
"According to the law, the public security bureau must allow us to see him," he said.
Mr Liu was detained on the eve of the publication of Charter 08, a document signed by hundreds of Chinese artists, academics and political activists.
It was published on the 60th anniversary of the promulgation of the Universal Declaration of Human Rights.
It called for political reforms in China, such as a new constitution, judicial independence and the freedom to assemble.
Many of those who signed the document were subjected to harassment from the Chinese government after its publication.
Mr Liu has been a political activist for more than two decades. He took part in the Tiananmen Square protests in 1989 - for which he spent two years in prison.
After his release he continued to push for political change.
Human rights organisations, such as Amnesty International, have called for Mr Liu's release.
"This use of state security charges to punish activists for merely expressing their views must stop," said Amnesty's Roseann Rife after Mr Liu's arrest was announced.
"This is another act of desperation by a regime that is terrified of public opinion."