(Adds celebrations in Sarajevo)

By Ellie Tzortzi

BELGRADE, July 21 (Reuters) - Bosnian Serb wartime president Radovan Karadzic, one of the world's most wanted men for his part in civilian massacres, was arrested on Monday, Serbian President Boris Tadic's office said.

Government sources said he had been under surveillance for several weeks, after a tip-off from a foreign intelligence service. In Sarajevo, scene of a bloody 43-month siege at the hands of Karadzic's Belgrade-backed forces, Croats and Bosnian Muslims streamed onto the streets to celebrate.

The arrest of Karadzic and other indicted war criminals, is one of the main conditions of Serbian progress towards European Union (EU) membership.

Richard Holbrooke, former U.S. assistant secretary of state for Europe who negotiated the 1995 Dayton accords that ended the war in Bosnia, welcomed his capture, describing him as the Osama bin Laden of Europe, "a real, true architect of mass murder".

The arrest came on the eve of a meeting of EU Foreign Ministers scheduled to discuss closer relations with serbia after formation of a new pro-western government led by Tadic's Democratic Party. The EU welcomed the capture, apparently in Belgrade, as a milestone in Serbian EU aspirations.

Karadzic, still seen by militant nationalists as a national saviour following the collapse of Yugoslavia, was expected to be transferred quickly to the custody of the Hague court.

Karadzic's place of hiding has been a constant subject of international speculation since he went underground in 1997. The West had long suspected Belgrade of failing to press the search, but the new government had signalled it wanted to comply.

SREBRENICA MASSACRE

Sources close to the government said Karadzic, distinguished by his characteristic long, grey hair, was arrested in Belgrade.

He was currently undergoing a formal identification rocess, inccluding DNA testing, and would be meeting with investigators overnight.

"Karadzic was located and arrested," the President's statement said. It gave no details.

The West is also pressing for the arrest of Bosnian Serb military commander Ratko Mladic, also in hiding.

Karadzic, was leader of the Bosnian Serbs during the 1992-95 Bosnia war. He was indicted by the United Nations war crimes tribunal in The Hague in July 1995 for authorising the shooting of civilians during the 43-month siege of Sarajevo.

He was indicted for genocide a second time four months later for orchestrating the slaughter of some 8,000 Muslim men after Mladic's forces seized the U.N. "safe area" of Srebrenica in eastern Bosnia.

He went underground in 1997, two years after NATO military intervention ended the war that followed from the collapse of Yugoslavia.

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For street scenes in Sarajevo [nL21239831] (Additional reporting by Paul Taylor and Mark John in Brussels, Lou Charbonneau in New York, Adam Tanner in San Francisco; editing by Ralph Boulton)

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