Terrorists have acquired new high-tech methods and are planning to use sleighs driven by flying reindeer to launch attacks on high-profile targets over the Christmas period, the United States Department of Homeland Security has warned.

“It appears that when we drove these evil-doers out of Afghanistan, they established terrorist training camps in the North Pole and Al Qaeda now has technology which not even Western science has been able to replicate,” US President George W Bush said.

President Bush says US intelligence suggests that Al Qaeda has already genetically modified reindeer to allow them to fly. Further, the US believes terrorists now have access to a highly specialised navigation system - code-named Rudolph - which allows them to guide their sleighs around the globe with precision.

As a result of the warning, the Bush administration has raised its colour-coded terror alert system to a new high, ‘red-nosed’.

Mr Bush says US intelligence officers have seen the sleighs in action and believe that elusive Al Qaeda chief Osama bin Laden was the man with his hands on the reins.

“Our officers spotted one of these flying sleighs in the air and the man driving it had a long white beard and we believe it was most likely the chief evildoer, Osama bin Laden,” the President said.

The US believes that Al Qaeda plans to drive the sleighs around the globe, possibly on Christmas Eve, and drop bombs wrapped as gifts down the chimneys of “high-value targets” including the White House, The Viper Room nightclub in Los Angeles and Elvis Presley’s former residence, Graceland.

“We will not allow terrorists to hold us to ransom this Christmas season,” President Bush said. “Our Air Force will be on full alert over the coming days and our Top Gun pilots will have orders to shoot down any flying sleighs they come across.

US defence officials have told the Ripper, on condition of anonymity, that the US is in the early stages of planning a military operation at the North Pole in an effort to shut down any terrorist bases.

“We routed the Taliban in Afghanistan because it gave succour and protection to terrorists and if we have to send our crack troops to the North Pole to track down Santa’s secret workshop and put it out of business, we will not be afraid to do it,” one particularly deep-throated official said.

“We’ve already added Santa to our no-fly list. We believe it may be important to spread democracy to the North Pole and therefore we’re examining the possibility of a pre-emptive strike on the House of Claus.”

Australian Prime Minister John Howard says his Government will consider rushing new terror warning fridge magnets to Australian households with information about what to do if they spot flying sleighs driven by men with white beards over the Christmas period.

“We can’t afford to take this sort of warning lightly,” Mr Howard said. “If we believe new fridge magnets are needed, we will act immediately and deliver new fridge magnets to provide the people of Australia with some peace of mind.”

Opposition Leader Mark Latham argues the drama over the flying sleighs is a “mockery” and a “fraud”, saying the US has most likely misidentified the sleigh Santa uses to deliver presents.

But a grinning, giggling Treasurer Peter Costello has mocked Mr Latham’s views.

“It appears the Leader of the Opposition still believes in Santa. Next thing, he’ll be trying to tell us that the Easter Bunny is leading the insurgency in Iraq, and then he’ll probably appoint the Tooth Fairy as his shadow treasurer. Though, at least that’d be better than Simon bloody Crean,” Mr Costello said.’