Manuel Marulanda, the founder and top commander of Colombia's main left-wing rebel army, has died of a heart attack after more than four decades fighting a fierce guerrilla war, his rebel group said.

Nicknamed "Sureshot" by his rebel comrades, Marulanda organized the Revolutionary Armed Forces of Colombia, or FARC, as a communist-inspired army in 1964, and his death is the heaviest setback in its history.

Colombia's military said on Saturday that intelligence sources showed Marulanda died in late March, and the news was confirmed by rebel commander Timoleon Jimenez in a video played on Venezuelan-based television channel Telesur on Sunday.

"Our maximum leader, Manuel Marulanda Velez, died of a heart attack on March 26... in the arms of his companion," Jimenez said, dressed in combat fatigues and standing before a Colombian flag in an unknown location.

Alfonso Cano, already a member of its seven-man leadership, will replace Marulanda as its chief, the FARC said. Cano, 59, is known as a more of a political leader than a military strategist and entered the FARC as a student activist.

Born into a peasant family, Marulanda rose from a humble businessman who once sold candy to become the commander of the FARC as it evolved from a ragtag army into Latin America's largest and oldest-surviving insurgency.

Marulanda, whose real name was Pedro Antonio Marin, was one of Colombia's most hunted men. He was reclusive and was last seen in public more than five years ago, in combat fatigues and with his trademark sweat towel slung over his shoulder.

Under his command, the FARC grew into a 17,000-member force controlling large parts of the country.

It has used kidnapping, extortion and the cocaine trade to finance its military operations against the army and right-wing paramilitary groups in a vicious conflict that has killed 40,000 people in the last decade alone.

"With his death, a chapter of the FARC has closed," Defence Minister Juan Manuel Santos said on Sunday. "He was someone who has been stuck in the past and always opposed peace."

President Alvaro Uribe's U.S.-backed security campaign has weakened the FARC. Several top bosses were killed over the last year and a female commander become the latest to desert earlier this month, saying the rebel force was "cracking".

FEARS FOR HOSTAGE VICTIMS

Marulanda's death could fuel more desertions and sharpen divisions inside the FARC leadership, where Cano is seen as more open to peace negotiations than hardline, military-wing leader Jorge Briceno, also known as "Monojojoy".

"He was an authority figure ... what he did was solve the disputes among the younger commanders," Pablo Casas, an analyst at the Security and Democracy think tank in Bogota, said of Maralunda.

"He was the one who had the final word and that will not be around anymore."

The FARC's key negotiator and No. 2 commander, Raul Reyes was killed in a Colombian army operation inside Ecuador in March. That raid sparked a regional crisis between U.S. ally Colombia and the leftist governments of Ecuador and Venezuela.

Karina, the senior rebel who deserted this month, said she had not been in contact with the leadership for two years, underscoring the communications difficulties among remaining commanders hiding out in Colombia's jungles and mountains.

The FARC, which now has around 9,000 fighters, remains a potent subversive force in some rural parts of the country aided by funds gained from participating in the cocaine trade.

But it is widely unpopular, especially in the cities, and Uribe has won broad support for his tough military campaign against the rebels.

The FARC still holds scores of hostages, including French-Colombian politician Ingrid Betancourt and three U.S. contract workers, they say they want to exchange for jailed guerrilla fighters.

The FARC freed six hostages earlier this year but attempts to reach a deal over more kidnap victims are deadlocked over rebel demands that Uribe demilitarize an area the size of New York City in southern Colombia to start talks. He refuses but has offered a smaller zone.

Uribe says some commanders have already contacted the government to offer to surrender with hostages, including Betancourt. He has offered them rewards and asylum in France.

Betancourt was kidnapped in 2002 while campaigning for Colombia's presidency, and French President Nicolas Sarkozy has pushed hard for her release.