DUBAI, July 23 (Reuters) - An Iraqi al Qaeda-led group said on Monday a U.S. suggestion that its leader is a fictitious character was a lie.

Brigadier-General Kevin Bergner said last week a senior operative for al Qaeda in Iraq captured this month told his U.S. interrogators that the self-styled Islamic State in Iraq is just a front for al Qaeda and its leader did not exist.

"The latest lie was that they have arrested a man who they called as the link with Sheikh Osama (bin Laden)," it said in a statement posted on an Islamist Web site.

"This is "a desperate attempt to cover the failure of the crusade on Islam's land", it added.

Voice recordings purporting to be from leader Omar al-Baghdadi have appeared on the Internet, although Bergner said he had been played by an actor.

Bergner has said the information came from an operative called Khalid al-Mashadani who was caught on July 4 and who he said was an intermediary to bin Laden.

The Islamic State of Iraq was established to try to put an Iraqi face on what is a foreign-driven network, Bergner said. The alias Baghdadi means the person hails from Baghdad.

"All of these are baseless lies and the imaginary media victories which the crusader enemies are trying to propagate to hide the facts of the (battle) field," the group said.

It did not mention Mashadani, who Bergner said was believed to be the top Iraqi in al Qaeda network in Iraq.

The U.S. military blames al Qaeda in Iraq for most major bombings in Iraq, saying the group is trying to trigger all-out civil war between majority Shi'tes and minority Sunni Arabs.

The Islamic State of Iraq was set up in October, comprising a group of Sunni militant affiliates and tribal leaders led by Baghdadi.

AlertNet news is provided by