Mr Mancini is being accused of collaborating with the CIA to abduct the Egyptian cleric Hassan Mustafa Osama Nasr, known as Abu Omar.

If the accusations prove to be true, this is set to give weight to allegations that European countries conspired with the Washington practice of "renditions," referring to the abduction of terror suspects.

"It is extremely serious that the deputy director [of SISMI] was arrested, especially when the director came to parliament and said he knew nothing about this, and now [he] is being arrested," said Italian socialist MEP Claudio Fava when speaking in the European Parliament.

Green MEPs Cem Ozdemir from Germany and Raul Romeva from Spain said "The arrest of Marco Mancini in Milan today confirms the collusion of EU Member States in CIA abuses on European territory."

"This arrest is only the tip of the iceberg. Strong suspicions of collusion exist in a number of member states," they added in a statement.

"Now that the Italian administration has begun to treat these charges with the seriousness they deserve, all other member states must follow suit and cooperate completely with the ongoing investigations," the green MEPs added.

But the Italian centre-right MEP Jas Gawronski commented "Osama bin Laden is happy today as we see that in Europe it is not terrorists but those tracking down terrorists that we are arresting."

A temporary parliament committee is currently investigating possible illegal CIA activities on EU territory and MEPs are set to vote on its conclusions on Thursday.

Centre-right deputies have accused their left-leaning colleagues of an anti-american spirit in the report and announced they would vote against it, despite their previous support of the report by the Council of Europe's investigation team.

Meanwhile, EU justice commissioner Franco Frattini said he respected the prosecutor's decision to arrest Mr Mancini, according to Reuters.

"The prosecutor is investigating, he is accusing this officer of the Italian secret service, we'll see whether he is responsible or not," he stated.

Meanwhile, in a statement the Italian government said that it would "collaborate fully" with the investigation and expressed its "trust in the institutional loyalty" of the secret services.

Previously, the government of Prime Minister Silvio Berlusconi denied having any knowledge of such CIA operations on Italian soil.

A Council of Europe report by Swiss MP Dick Marty describes Mr Omar's abduction as one in a "global spider's web" of rendition flights.

Mr Marty also said that it was "unlikely that the Italian authorities were not aware of this large-scale CIA operation."

The Egyptian cleric, Abu Omar, was the imam of Milan's main mosque who disappeared mysteriously in February 2003.

Mr Omar was than released in 2004 and afterwards alleged that he had been tortured.

A second Sismi official, General Gustavo Pignero, who is in poor health, was placed under house arrest on the same case.

According to La Stampa a former high official at the US embassy in Rome was in contact with Mr Pignero in the planning stages of the Abu Omar operation.

On Wednesday arrest warrants were also issued for three American CIA members and an official at the US air base at Aviano in northern Italy.

In November 2005, Italian prosecutors requested the extradition from the US of 22 CIA agents accused of abducting Mr Omar but the Berlusconi government refused to sign off the extradition requests.