The unnamed official, who is involved in the war in Afghanistan and reportedly has access to sensitive intelligence material, said the al-Qaida chief and his Egyptian deputy, Ayman al-Zawahiri, are moving separately between houses in the Chitral district and the Kurram Valley.
That means they've pretty much come full circle since they fled Afghanistan during the battle for the mountain hideout at Tora Bora near the Pakistan border in December 2001. The area where they are reported to be holed up neighbors Tora Bora.
Bin Laden's whereabouts have been something of a mystery since he escaped from U.S. Special Forces at Tora Bora. Recent U.S. reports have placed him in the tribal lands of Pakistan's North Waziristan region, which is much further south than the location given by the NATO official.
U.S. intelligence claimed that bin Laden has to be constantly on the move to evade his pursuers, particularly the ever-increasing airstrikes by missile-armed U.S. drones that reportedly have killed a score of his lieutenants over the last 18 months.
The elusive al-Qaida warlord has often been portrayed as living rough in caves, out of contact with his jihadist network.
But, the NATO official told CNN, "Nobody in al-Qaida is living in a cave."
Michael Scheuer, a former CI officer who ran the unit charged with tracking bin Laden, observed that the official's report "exposes the lie that Bush and Obama have been telling us since 9/11 that he was running from rock to rock and cave to cave."
But Scheuer, who has been highly critical of U.S. operations against al-Qaida, also doubts that the official's observations reflect any significant intelligence breakthrough.
"If there was genuine intel," he told The Upshot Web site, "they'd not go public with it. They would try to kill him."
He said he believes that shooting down the myth bin Laden is on the run, cut off from his forces, means "we're just facing reality at last. Bin Laden lives among people who a) regard him as an Islamic hero and, b) whose tribal mores require them to protect a guest with their own lives."
Pakistani officials deny bin Laden is holed up in their country.
Although the NATO official provided no evidence to support his contention that bin Laden is protected by Pakistani intelligence, the Americans have long claimed the principal agency, the Inter-Services Intelligence directorate, or at least elements within it, have close links to the Islamist militants.
But wherever bin Laden may be, the contention that since 9/11 he's been isolated by the U.S.-led manhunt for him and thus marginalized with little or no power has spurred questions about whether he is relevant any more.
In January, bin Laden released an audio tape praising a young Nigerian who allegedly tried to blow up a U.S. airliner over Detroit on Christmas Day 2009.
The tape "raised the question of whether he's now only an irrelevant militant seeking to associate himself with even failed attacks originated by groups he doesn't control," observed al-Qaida specialist Peter Bergen who interviewed bin Laden in Afghanistan before 9/11.
He argues that although bin Laden is supposedly holed up in Pakistan's badlands, his ideas and strategy remain a powerful tool for global jihad and has inspired repeated attacks on the West.
While the jihadists have been unable to repeat the catastrophic 2001 attack on the United States, they still pose a grave threat because their network is so diffuse and increasingly able to penetrate the West.
"According to Spanish prosecutors, the late leader of the Pakistani Taliban, Baitullah Mehsud, sent a team of would-be suicide bombers to attack Barcelona's public transport system in January 2008," Bergen said.
"Luckily, the alleged plotters were arrested before the plan was carried out …
"Bin Laden has fallen relatively silent, seemingly more worried about staying alive than staying relevant," Bergen noted.
"Still, as he enters late middle age -- family members say he turned 53 in February -- he may take some satisfaction that his message continues to resonate with all too many disaffected men, from Connecticut to Kandahar."