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GROZNY, Russia — Police killed the Chechen rebel leader Saturday acting on a tip from within his network, a possible blow to efforts to spread the increasingly Islam-inspired insurgency throughout southern Russia.

Abdul-Khalim Sadulayev was shot during a raid on a hideout in his Chechen hometown of Argun, nine miles east of Grozny. He had been planning a terror attack in Argun to coincide with the Group of Eight summit of leading industrialized nations in St. Petersburg in mid-July, the Moscow-backed Chechen premier said.

Prime Minister Ramzan Ka-dyrov posed for TV cameras next to a body identified as that of the rebel leader. He said a close associate of Sadulayev's tipped police to his whereabouts for the equivalent of $55.

"He urgently needed to buy a dose of heroin, so he sold his leader for heroin," Kadyrov said.

The prime minister said his paramilitary police had wanted to capture Sadulayev but had to kill him when he resisted arrest.

"The terrorists have been virtually beheaded. They have sustained a severe blow, and they are never going to recover from it," Kadyrov said. "We must decisively end international terrorism in the whole of the North Caucasus."

An intelligence agent and a police officer were killed in the operation, the Federal Security Service said in a statement.