Earlier on Saturday an interior ministry official said that 21 members of the security forces and 37 rebel fighters were killed in the fighting, which appeared to be among the heaviest in the southwestern province of Pakistan in years.
But there have been conflicting figures for the casualty toll in the battle and the military has confirmed the deaths of only four officers and a soldier.
A military spokesman said that security forces had attacked a cave complex and exchanged heavy fire. During the battle one cave collapsed burying all those inside, including, it was presumed, Nawab Akbar Khan Bugti, a veteran Baluch nationalist and rebel leader.
Mohammad Ali Durrani, the information minister, told Reuters: "It is confirmed, Nawab Bugti has been killed in an operation."
Bugti was a powerful tribal leader who went underground late last year, joining rebels who have been waging a low-key insurgency for decades.
Baluchistan is Pakistan's biggest but poorest province. It has Pakistan's main natural gas reserves but Baluch separatists have long complained that the province does not get a fair share of the profits from its resources.
Rebels have stepped up attacks on the region's infrastructure, including gas pipelines, as well as security posts over the past year.
Bugti, who was British-educated and in his 80s, had been accused of operating private jails and running a feudal justice system in the area, in addition to being blamed for the deaths of dozens of soldiers and police.
Officials say that hundreds of people have been killed in the region since late 2004.