By Sonya Dowsett

MADRID (Reuters) - Spain said security forces had arrested the head of Basque militant separatist group ETA in south-western France on Saturday in a joint operation between the French domestic intelligence service and Spanish police.

Mikel Irastorza was detained in a house in Ascain, a village near the Pyrenees mountains, the Spanish Interior Ministry said in a statement, adding that the 41-year-old leader of the illegal organization had been on the run since 2008.

Irastorza had led ETA for just over a year since the arrests of two previous leaders in France last year, the ministry said.

"(The arrest) is a crushing blow to ETA, removing its leadership and eliminating the part that controlled arms and explosives," it said, adding that the operation remained open.

French and Spanish media reported that Irastorza is being held in the French city of Bayonne.

ETA, which does not normally comment in such situations, was formed in the late 1950s during the dictatorship of Francisco Franco and aims to establish an independent Basque state in northern Spain and southern France.

The group killed over 800 people over several decades through bombings and execution-style killings.

However, ETA has been severely weakened in recent years after hundreds of its members were arrested and some of its weapons were seized. It called a unilateral ceasefire in 2011 and pledged to turn in its weapons, although a full handover has yet to happen.

A Spanish man and a French woman were also arrested, the ministry said, alleging they had given shelter to Irastorza and were the owners of the house where he was arrested.

(Editing by Alexander Smith)