A dispute has broken out over the future of the site where Osama Bin Laden was shot dead in 2011, with authorities pushing rival plans for a graveyard or playground.

The military has erected a wall around the 3,800 square feet plot where the al Qaeda leader's compound once stood in Abbottabad, and wants to convert it into a graveyard. But the provincial government, which was handed the land after Bin Laden was killed by US special forces, is trying to redevelop it as a playground.

"We have secured this place from encroachment by building a wall around it and now we will develop this into a graveyard because there is a serious issue of unavailability of graveyards in the area," Zulfiqar Ali Bhutto, vice president of the Cantonment Board of Abbottabad (CBA), told AFP.

However, Mushtaq Ghani from the Khyber Pakhtunkhwa government opposed developing a cemetery in the built up area.

"The government wants to construct a playground there. If we get funds, we will turn that place into a playground this year," Ghani said. "You can't develop a cemetery in the middle of houses."

Bhutto insisted CBA had the authority to push ahead with it plans. "We are going to meet the provincial government officials next week and will sort out this issue," he said.

Elite US Navy Seals launched a helicopter raid on the highly fortified compound on May 2, 2011, killing Osama Bin Laden and taking away his body. Pakistani authorities later demolished the building and left the plot vacant.