Spanish police said on Wednesday they had arrested one of Britain's most wanted fugitives, sought for his suspected role in the murder of a teenager.

British police believe David Ungi, 30, was involved in the fatal shooting in 2015 in Liverpool of 18-year-old Vinny Waddington while he was riding a motorcycle.

Ungi, who is also wanted in connection with heroin trafficking, left Britain less than 24 hours after Waddington was killed, according to British authorities.

Two other men were convicted in 2016 of the 18-year-old's murder.

Spanish police said in a statement Ungi was arrested along with three other British men in the town of Coin near the southern resort of Marbella on May 5 as they entered a gym at a shopping centre.

Officers seized a firearm from a rucksack being carried by one of the men, Spain's National Police said in a statement.

A police search of Ungi's residence in Coin turned up a machinegun and two other guns as well as "abundant ammunition", 15 kilos of cocaine and 19 kilos of hashish, the statement added.

Spanish police said the operation was carried out in cooperation with Britain's National Crime Agency, which had put Ungi on its most wanted list.

The Spanish coast has long a popular bolthole for British criminals fleeing the law because they can blend easily into thriving expatriate communities.

There are about 290,000 British nationals officially registered as living in Spain, making them the fourth-largest foreign population in the country, according to national statistics institute INE. (AFP)