Veteran former president Ali Abdullah Saleh has been killed in a shooting after switching sides in Yemen’s civil war, abandoning his Iran-aligned Houthi allies in favour of a Saudi-led coalition.

Sources in the Houthi militia said its fighters stopped Mr Saleh’s armoured vehicle with an RPG rocket outside the embattled capital Sanaa on Monday and then shot him dead.

Sources in Mr Saleh’s party confirmed he died in an attack on his convoy.

Unverified footage of his bloodied body lolling in a blanket circulated just days after he tore up his alliance with the Houthis following nearly three years in which they had jointly battled the Saudi-led coalition that intervened to try to reinstate Yemen’s internationally recognised government.

In a televised speech on Monday, Houthi leader Abdul Malik al-Houthi congratulated the Yemeni people for what he described as a victory against a “conspiracy of treason” engineered by the group’s Gulf Arab enemies. He did not mention Mr Saleh’s death.

Mr Saleh, 75, had said in a speech on Saturday that he was ready for a “new page” in ties with the coalition and called the Houthis a “coup militia”, leading them to accuse him of betrayal.

Firefighters work to extinguish a fire near the residence of Yemeni ex-president Ali Abdullah Saleh. Photo: AAP

Warfare between the former allies has torn densely populated Sanaa for days as Houthi fighters seized control of much of the capital and on Monday blew up Mr Saleh’s house while coalition jets bombed their own positions.

The end of their alliance had seemed poised to transform the fortunes of war after two years of attrition along mostly static front lines, which gave the Saudi-led coalition a new advantage over the Houthis.

Officials in his own General People’s Congress party said Mr Saleh was killed outside Sanaa in an RPG and gun attack on his convoy along with the GPC’s assistant secretary general, Yasser al-Awadi.

His death was confirmed by Mr Saleh’s nephew and former chief of Yemen’s security forces, Yahya Mohammed Abdullah Saleh, who hailed him as a martyr on his official Facebook page.

Residents reported that the situation in Sanaa had calmed. Most people were indoors, and streets were deserted amid a state of fear as the Houthis asserted full control. Saudi-led aircraft continued to fly overhead.

Houthi spokesman Mohammed Abdul Salam claimed significant gains in the battle for Sanaa on Monday.

“With the aid and approval of God, the security forces backed up by wide popular support were able last night to cleanse the areas in which the militias of treason and betrayal were deployed,” he said in a statement.

– AAP