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By Matt Spetalnick and Mark Hosenball

WASHINGTON (Reuters) - President Barack Obama hailed the U.S. killing of American-born militant Anwar al-Awlaki in Yemen on Friday as "another significant milestone" in efforts to defeat al Qaeda and proof that it and its allies will find no safe haven.

Awlaki, identified by U.S. intelligence as "chief of external operations" for al Qaeda's Yemen branch and a Web-savvy propagandist for the Islamist cause, was killed in a CIA drone attack in a remote Yemeni town, U.S. officials said.

"The death of Awlaki is a major blow to al Qaeda's most active operational affiliate," Obama said, depicting it as another success against a broader militant network still reeling from the U.S. killing of Osama bin Laden.

Progress against al Qaeda could help Obama polish his national security credentials as he seeks re-election in 2012 and fend off Republican efforts to depict him as a weak global leader and commander-in-chief.

But the Obama administration drew immediate condemnation from U.S. civil libertarians who said it was illegal to carry out such a killing without due process of law.

U.S. and Yemeni officials said they also believed a second English-speaking Qaeda operative, Samir Khan, was killed at the same time. One U.S. official said Khan was editor of "Inspire," a magazine-style publication that had become al Qaeda's principal English-language propaganda vehicle.

It was the latest in a series of deadly U.S. strikes against violent militants, including the raid on bin Laden's Pakistani compound in May and a late August drone attack that killed the organization's recently promoted No. 2.

"The death of Awlaki marks another significant milestone in the broader effort to defeat al Qaeda and its affiliates," Obama said in Fort Myer, Virginia, at a ceremony marking the swearing-in of the new head of the Joint Chiefs of Staff.

"This is further proof that al Qaeda and its affiliates will have no safe haven anywhere in the world," he said.

Obama acknowledged, however, that al Qaeda in the Arabian Peninsula "remains a dangerous though weakened terrorist organization" and vowed to remain resolute.

In this case, the U.S. target was singular: an American-born cleric whom U.S. officials said headed al Qaeda's most dangerous offshoot and had a role in at least two failed plots to target the United States.

"This was a terrorist who wasn't simply a propagandist, but over the years had become an operational figure who was increasingly focused on planning and carrying out attacks against the United States and our allies," a senior U.S. defense official said. "A very bad man just had a very bad day."

"GLOBAL TERRORIST"

The U.S. government branded Awlaki a "global terrorist" last year. He had been targeted more than once by U.S. forces authorized to kill him because of what Washington believed was the role he played in radicalizing English-speaking Muslims and because of his alleged role in plots to attack U.S. targets.

Awlaki was implicated in at least two major U.S. incidents in 2009. Following the shooting attack on soldiers at Ft. Hood, Texas, in which U.S. Army psychiatrist Nidal Malik Hasan has been charged, investigators found evidence that Hasan had been in e-mail contact with Awlaki.

U.S. investigators also believe there was contact between Awlaki and Umar Farouk Abdulmutallab, a Nigerian-born militant who studied Arabic in Yemen and has been charged with a failed attempt to attack a Detroit-bound airliner on Christmas Day, 2009, with a bomb hidden in his underpants.

Awlaki also was accused of helping to oversee a failed plot in October 2010 to blow up U.S. cargo aircraft, an Obama administration official said.

U.S. agencies were authorized to kill Awlaki if he could be found. U.S. officials said at the time Awlaki was the first American citizen to be targeted for possible U.S. killing since al Qaeda's September 11, 2001 attacks on New York and Washington.

The targeting of a U.S. citizen raised concerns among civil libertarians about extra-judicial killings, however. Jameel Jaffer, deputy legal director of the American Civil Liberties Union, said: "The targeted killing program violates both U.S. and international law."

It was unclear whether Awlaki's killing would ease strains between the Obama administration and embattled Yemeni President Ali Abdullah Saleh, who is clinging to power despite months of popular protests, factional violence and international pressure.

The White House has repeatedly called on Saleh to relinquish power and start a democratic transition.

Obama did say, however, that Yemen's cooperation in the drone strike showed that "the government and people of Yemen have joined the international community in a common effort against al Qaeda."

The United States has stepped up drone strikes in Yemen to try to keep al Qaeda off balance and prevent it from capitalizing on the strife and chaos gripping the nation.

U.S. intelligence officials have said al Qaeda has been severely debilitated by the loss of some of its top leaders.

In Washington, lawmakers praised the killing of Awlaki.

U.S. Representative Peter King, chairman of the House of Representatives Committee on Homeland Security, called it "a great success in our fight against al-Qaeda and its affiliates."

"The killing of al-Awlaki is a tremendous tribute to President Obama and the men and women of our intelligence community," King, a Republican, said. But he said the United States must remain vigilant.

(Additional reporting by John O'Callaghan, Deborah Charles in Washington, Malathi Nayak in Fort Myer, Virginia; Editing by Vicki Allen and Eric Beech)

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