MEXICO CITY - The eccentric leader of the brutal La Familia drug cartel was killed in a shootout during two days of fighting between federal police and gunmen that terrified civilians across a western Mexican state, the government said Friday.

A Mexican federal officer aims his gun during a search operation after gunmen opened fire on two men at a stop sign in Ciudad Juarez, Mexico Friday, Dec 10, 2010. [Photo/Agencies]

The death of Nazario Moreno Gonzalez -- nicknamed "The Craziest One" -- is a major blow to a drug cartel that rose to national prominence four years ago by rolling severed heads into a nightclub and declaring that its mission was to protect Michoacan state from rival gangs and petty criminals.

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Police believed that the 40-year-old Moreno -- also known as "El Chayo" or "The Doctor" -- was killed in a clash Thursday between cartel gunmen and federal police, said Alejandro Poire, the government spokesman for security issues.

In a brief statement, the office of President Felipe Calderon confirmed Moreno's death.

Cartel gunmen have been fleeing with their casualties and Moreno's body has not been recovered, Poire said. Police recovered the bodies of three other suspected La Familia members and detained three others.

Five officers and three civilians -- including an 8-month-old baby and a teenage girl -- were also killed in the shootouts, which began Wednesday night, when La Familia gunmen attacked federal officers in Moreno's home city of Apatzingan and fired on cars.

The gunmen torched vehicles across Michoacan and used them as barricades, even blockading all entrances into its capital of Morelia to prevent federal police from sending reinforcements.

Moreno is considered the ideological leader of La Familia, setting a code of conduct for its members that prohibits using hard drugs or dealing them within Mexican territory. He purportedly has written a religiously tinted book of values for the cartel, sometimes known as "The Sayings of the Craziest One."

In February, the US government added Moreno and six other reputed La Familia leaders to its "Kingpin Act" list, a move that prohibits American citizens and firms from having any business dealings with them and freezes any US assets they may have.

Back in 2003, a federal grand jury in McAllen, Texas, indicted Moreno on charges that included conspiracy to distribute marijuana, cocaine and methamphetamine.

Poire said Moreno emerged as the leader of La Familia in 2006, when the gang -- then known as "The Business" -- broke off from the Gulf cartel and declared its independence by rolling the severed heads into a disco in the mountain town of Uruapan.

A message left with the heads declared: "La Familia doesn't kill for money, doesn't kill women, doesn't kill innocents. Only those who deserve to die will die."

Calderon, who was born in Michoacan, responded by deploying tens of thousands of soldiers to the state to crush the cartel -- an increasingly bloody fight that has since expanded to other drug trafficking hotspots across the country.

The crackdown has picked up pace over the past year: Moreno was the fourth top leader of a drug gang killed in shootouts with security forces since December 2009 and three other alleged cartel leaders have been arrested.

But the victories have had a bloody cost: 28,000 people have been killed in drug-gang violence since 2006.

La Familia has since become one of the biggest methamphetamine traffickers to the United States. Meanwhile, the cartel has proclaimed in banners and even newspaper advertisements that it is trying to protect Michoacan from other cartels and common criminals.

A Mexican government profile said Moreno set out to kill top members of the Gulf cartel after breaking off from that gang, with the complicity of some state and federal law enforcement officials.

The government claims that that La Familia has been severely weakened after four years of fighting off its rivals and security forces.

Several leading La Familia traffickers have been arrested in recent months. One of those suspects, Sergio Moreno Godinez, said under police interrogation last month that the cartel is in decline.

He confirmed the authenticity of a letter, e-mailed to journalists and dropped on the streets of several towns, saying the cartel is willing to disband if the government can improve security for Michoacan.

"What we have seen in the last days is a criminal organization repudiated by the population, and which has been significantly weakened," Poire said. "This is demonstrated by its false calls for a truce and the confessions of its members."

Mexican authorities put a $2 million bounty on Moreno's head in March 2009. His official wanted poster -- featuring a fuzzy photograph of a middle-aged man with a thin face and a mustachio -- accuses him of drug trafficking, kidnapping and murder.