Robert Seldon Lady was sentenced to nine years in jail for his involvement in the abduction of the man, an Egyptian cleric, in Milan in 2003.

The cleric, known as Abu Omar, was allegedly flown to Egypt and tortured.

Lady was convicted in absentia with 22 other Americans for their role in his "extraordinary rendition".

But the Italian authorities have so far only sought the international arrest of the former Milan station chief, Italian media say.

However, Panamanian Security Minister Jose Raul Mulino told the Associated Press that he was unaware of the detention. The CIA said it had no immediate comment.

Lady was reportedly arrested near Panama's border with Costa Rica.

The Milan case was the first involving extraordinary rendition, the CIA's practice of transferring suspects to countries where torture is permitted.

The practice has been condemned by human rights groups as a violation of international agreements.

Hassan Mustafa Osama Nasr, who was considered a terrorism suspect by the US, was abducted in February 2003 and transferred between US military bases in Italy and Germany before being brought to Egypt.

Twenty-two CIA agents, including Lady, and one air force pilot were convicted in 2009 of abducting the cleric. Their sentences were upheld last year by Italy's highest appeals court.

Lady reportedly rushed back to the US in 2007, when court hearings began in Milan to decide whether to put the 23 Americans on trial.

He said he had opposed the proposal to kidnap the imam, but was overruled. A previous Italian government has said Lady was the only one of the 23 Americans that could be extradited, given the length of his sentence.

If Lady is extradited, he is likely to spend six years in prison under a 2006 amnesty by the country.