Lieutenant-General Rail Rzayev, 64, was gunned down outside his home in the capital Baku as he left for work, interior ministry spokesman Sadiq Gozalov told AFP.

"The general was shot and received a heavy wound to the head. He was sent to the military hospital in Baku, where he died," Gozalov said.

Gozalov said police were investigating and that military prosecutors would be handling the case. He said he had no information regarding a possible motive for the shooting.

A funeral was held several hours after his death, in accordance with Muslim tradition. ANS television showed images of Rzayev's coffin, draped in an Azerbaijani flag, being carried by an honour guard of soldiers.

Azerbaijani President Ilham Aliyev condemned the killing and hinted it may have been aimed at sowing political instability.

"Those who committed and those who ordered this terrible crime must be promptly exposed and detained," Aliyev told law-enforcement officials in televised remarks.

"At various times there have been attempts to destabilise the political situation in the country, but the public knows that law enforcement bodies have always dealt with such attempts," he said.

Azerbaijan suffered from a string of high-profile assassinations in the early 1990s, including the killings of the deputy speaker of parliament and the presidential security chief in 1994.

Experts said the killing may have been a contract hit linked with Rzayev's role in large-scale military acquisitions Azerbaijan has made in recent years as government coffers surged from oil revenues.

"This is the most serious murder in the history of Azerbaijan's defence ministry," Baku-based military analyst Uzeir Jafarov said.

"Rzayev was the focal point for air force and air defence military acquisitions and the largest part of (Azerbaijan's) military budget is being allocated for acquisitions in these spheres."

He said he was unaware of any personal problems that may have been behind the killing.

Jafarov also said Rzayev had no ambitions outside his role as air force chief and doubted whether the killing was linked to an internal struggle within Azerbaijan's military.

Azerbaijan has more than quadrupled its military budget in the last five years thanks to soaring oil revenues.

But in a report last year, the Brussels-based International Crisis Group said Azerbaijan's military is plagued by "widespread inefficiency, corruption and mistreatment."

Azerbaijan is in the strategic Caucasus region, where Russia and the United States are vying for influence. The energy-rich, mainly Muslim republic is also a major energy exporter and transit hub for oil and gas from the Caspian Sea.

Azerbaijan remains technically at war with neighbouring Armenia over the separatist region of Nagorny Karabakh, which ethnic Armenian separatists wrested from Baku's control during a war in the early 1990s.

Azerbaijan has also claimed it faces a threat from radical Islamic groups and has arrested dozens of alleged extremists in recent years on charges of plotting attacks.

In 2007, Azerbaijani authorities said they had foiled a major "terrorist" attack planned against government facilities and diplomatic missions, including the US embassy.

ANS television reported that Rzayev had been the head of Azerbaijan's air force and air defence forces since 1992.

Rzayev was Azerbaijan's pointman in negotiations between Russia and the United States over the use of the Gabala radar station in northern Azerbaijan.

Russia in 2007 offered to share the Gabala station, which it leases from Azerbaijan, in exchange for the US dropping plans to deploy a radar station in the Czech Republic and missile interceptors in Poland as part of its missile defence systems.

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