I was going to wait for more credible sources but looks like it's about to take off in the blogosphere so here is the rumor.

(Please note these are Australian wires reporting that a British paper will be making the official report - if there is really anything to this no one should be reporting on it becuase, well, Bin Laden might have a radio!)

First reports; The Weekend Australian and News.com.auand The Sunday Mail

OSAMA bin Laden is reportedly surrounded by United States special forces in a mountain range that straddles north-west Pakistan and Afghanistan. Internationally respected investigative journalist and author Gordon Thomas says the al-Qaida terror group leader has been sighted for the first time since 2001 and is being monitored by satellite.
In a report to be published in a British newspaper, Thomas says bin Laden is in a mountainous area to the north of the Pakistani city of Quetta.
The region is said to be a stronghold for bin Laden supporters and the terror kingpin is estimated to have 50 of his fanatical bodyguards by his side.
Thomas attributes his report to "a well-placed intelligence source" in Washington who is quoted as saying: "He (bin Laden) is boxed in."
The area makes an all-out conventional military assault impossible, according to the report.
The plan to capture him would depend on a "grab-him-and-go" operation.
"US helicopters already sited on the Afghanistan border will swoop in to extricate him," the report says.
It continues by saying bin Laden and his men "sleep in caves or out in the open".
"The area is swept by fierce snow storms howling down from the 3000m-high mountain peaks. Donkeys are the only transport."
The US special forces are "absolutely confident" there is no escape for bin Laden and are waiting for the order to snatch the shadowy terrorist leader.
The timing of that order will ultimately depend on President George Bush, the report says.
"Capturing bin Laden will certainly be a huge help for him as he gets ready for the election.
"It will be an even bigger bonus than getting Saddam."
The article goes on to say bin Laden's movements are continually monitored by a US National Security Agency satellite positioned over the land in which the wealthy Saudi is trapped.
Joint chiefs of staff chairman General Richard Myers said last week the US had been engaged in "intense" efforts to capture bin Laden.
But General Myers insisted that the focus of the search had not narrowed for months.
"There are areas where we think it is most likely he is, and they remain the same," he said. "They haven't changed in months."
Asked where bin Laden was hiding, General Myers said: "We think in that border region somewhere. We don't know precisely."
Bin Laden's whereabouts were discovered, according to the report, when US Central Intelligence Agency analysts – geographers and soil experts – studying the background in the al-Qaida boss's latest video suggested it matched rocks in the Toba Kakar ranges.
CIA agents, working with Pakistani guides, went from Afghanistan to the region to take photographs and bring out rock and soil samples.
These were flown to Washington where the CIA analysts electronically matched them to the video background.
A two-man special forces surveillance unit infiltrated the area.
"Within a week, they had picked up the first clues that bin Laden was around," according to a source quoted in the report.
"Other teams then slipped into the area.
"No helicopters were used, to avoid any alert."
Once the area was sealed, the special forces troops watched and waited for the order to go in and end the largest manhunt in history.
Bin Laden, head of the fanatical Muslim al-Qaida group, is alleged to have masterminded the September 11, 2001, terror attacks on New York and Washington.