Pakistan is under intense pressure to act against militants
Pakistani security forces have swooped on a camp in Pakistani-administered Kashmir used by a militant group that India links to the Mumbai attacks.
The Lashkar-e-Taiba group's operational chief, Zaki-ur-Rehman Lakhvi, who is said by Delhi to have ordered the attacks, was reportedly seized.
Witnesses heard several loud explosions and saw a helicopter and dozens of army personnel at the scene.
The outlawed group is one of the most feared in Indian-administered Kashmir.
Government and militant-related sources in the capital Islamabad and in the Kashmiri city of Muzaffarabad reported Mr Lakhvi's detention although there has been no official confirmation.
Up to four other people were also seized during the raid on Sunday.
The BBC's Barbara Plett in Islamabad says that if the reports prove to be true, it is unlikely Mr Lakhvi will be handed over to India and any trial will probably take place in Pakistan.
The government has been under tremendous Indian and American pressure to act on allegations that the Mumbai atrocities were linked to Pakistan, she adds.
In Washington, a White House spokeswoman praised Pakistan for taking action against militants.
"I think there is no doubt that Pakistan has taken some positive steps," the spokeswoman, Dana Perino, said.
"What's critically important now is that we continue to work together - the Indians, the Pakistanis, the United States, and our allies - to prevent follow-on attacks after the attacks in Mumbai."
The camp, at Shawai on the outskirts of Muzaffarabad, is run by the Islamic charity Jamaat-ud-Dawa, widely seen as a front for Lashkar-e-Taiba, which was banned in 2002.
Witnesses say the raid began on Sunday afternoon.
"I don't know details as the entire area was sealed off but I heard two loud blasts in the evening after a military helicopter landed there," local resident Nisar Ali told Reuters news agency.
Local residents said the army had blown up buildings at the camp, which has an office, religious school and a residential area housing about 150 people.
"Lakhvi is among four or five people arrested," a Jamaat-ud-Dawa official told Reuters, on condition of anonymity.
The BBC's Zulfikar Ali, in Muzaffarabad, was unable to reach the camp because of the cordon but did see about 14 army vehicles leaving the area.
Islamabad denies any involvement in the Mumbai attacks, which left at least 170 people dead, but some of the gunmen are said to have had links to Pakistani militants.
Indian investigators have said that the only gunman captured in Mumbai, Azam Amir Qasab, was indoctrinated by Lashkar-e-Taiba (Soldiers of the Pure), and trained at a camp run by the group.
Although the authorities in Pakistan formally banned it six years ago and curbed its activities, analysts say its camps were never closed.
The New York Times, in a report on Monday quoting unidentified US intelligence officials, said that Pakistan's main spy service had allowed the group to train and raise funds in recent years.
The Inter-Services Intelligence, or ISI, had shared intelligence with the group and protected it, the report said, but there was no evidence linking the ISI to the Mumbai attacks.
Last week, US Secretary of State Condoleezza Rice urged Islamabad to mount a "robust" and "effective" response to the attacks in Mumbai.
The assault will defuse tensions in the short-term, our correspondent Barbara Plett says, but both Washington and Delhi will be looking to see how far the Pakistani action goes.