The unnamed official said bin Laden and Ayman al-Zawahiri are thought to be living in houses, not caves, and protected by residents and members of the Pakistani intelligence community, CNN reported.
Pakistani officials have repeatedly denied protecting leaders of al-Qaida.
The official said bin Laden likely moved about in an area from mountainous Chitral near the Chinese border to the Kurram Valley near Afghanistan's Tora Bora region.
The official also confirmed the U.S. assessment that Taliban leader Mullah Omar has moved between the Pakistani cities of Quetta and Karachi in the past several months, but didn't say how coalition military leaders got the information, CNN reported.
Pakistani Interior Minister Rehman Malik said Monday similar reports on the location of bin Laden and Omar have been disproved previously and denied the two men were in his country.
The NATO official said finding al-Qaida leaders now is important for the region's future.
"Every year the insurgency can generate more and more manpower," he said.
The NATO official said the overall strategy is to increase airstrikes and ground attacks to put more pressure on the Taliban and insurgent groups to negotiate with the Afghan government.
The official said an internal assessment indicated between 500,000 and 1 million "disaffected" men ages 15-25 live in the Afghan-Pakistan border region, willing to fight for money, not to advance the Taliban philosophy.
"We are running out of time," he said.
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