Shocked residents spoke of their disbelief yesterday after it emerged one of the world's most wanted terrorists had been living a double life in an Edinburgh flat.

Eta terror chief Benat Atorrasagasti Ordonez, 36, has been on the run since 2001 and was sentenced to five years in jail in his absence for transporting gunmen over the border between Spain and France.

He has been in hiding for more than a decade but his life as a fugitive came to an end after Lothian and Borders Police raided his rented flat in the Leith area on Friday night.

The Basque separatist had been living under a fake name with his wife and two children and was working as a van driver for a company in Livingston.

There is speculation that he was living in Scotland as a sleeper and was lying low while waiting for orders from the terror group's high command.

The front of the Sloan Street flat was secured with metal panels yesterday and locals said the family had been living at the flat for around six months and kept a very low profile.

Bob Bulloch, 67, lives in the flat above Ordonez's home in the tenement block on the quiet street.

He said: "I heard all the commotion and there were dozens of police everywhere. They took someone away in a van.

"At first I though there must have been a murder or it was drug-related because of the amount of police.

"I'm not too fazed because it's a big city, but I'm shocked it's someone linked to terrorism.

"I've never seen the guy before – they always had the curtains closed.

"They kept a really, really low profile. I've lived here for years and don't know most of the folk in the block. That's just how it is these days.

"But that family were so private it did make you wonder. I was certainly suspicious of them.

"All the neighbours are planning on clubbing together to fix the roof and he was the only resident who said no. It makes sense why he didn't want to now."

Jane Fletcher, 23, lives just two doors away from the property where Ordonez was arrested.

She said: "I'm in total shock. I just can't believe it. I have seen the guy a few times standing outside the front of the house smoking.

"I've seen him walking in the street with a woman and two small children as well. They had the curtains drawn most of the time and seemed to keep themselves to themselves.

"I've never seen him hanging around in any of the local bars or with friends. It all seems quite obvious now that he was lying low."

Ms Fletcher added: "You do expect serious crimes in big cities, but finding out that a wanted terrorist who has been on the run for 10 years is living on your doorstep is very scary. I don't know how much of a threat he posed but I'm just glad that they got him."

Ordonez of San Sebastian, in the Basque region of Spain, will appear in court in Edinburgh today and will most likely be extradited for trial before French and Spanish courts.

A Lothian and Borders Police spokesman confirmed the arrest: "A 36-year-old man has been arrested in Edinburgh on two European warrants in connection with historical crimes committed in Spain and France.

"The man was arrested in the Leith area of the capital on Friday evening. We can confirm that no armed officers were involved and at no time was any member of the public at risk.

The police spokesman added: "The man will appear at Edinburgh Sheriff Court on Monday under the terms of the Extradition Act."