A Taliban commander is reported to have ordered troops occupying a district only 60 miles from Islamabad to pull back as alarm mounts in Washington, London and Pakistan over their advance.
Reuters news agency quoted a Taliban spokesman called Muslim Khan saying there were around 100 fighters in Buner, a district less than five hours' drive from the capital, but that "our leader has ordered that Taliban should immediately be called back from Buner".
Khan belongs to a faction led by the Taliban commander Maulana Fazlullah, whose stronghold is in the neighbouring Swat Valley where the government has caved in to their demands for the imposition of Islamic law. He said government and Taliban representatives were en route to Buner, along with a radical Muslim cleric who brokered the Swat arrangement, to deliver a message to fighters to leave the district. Khan has been quoted in the past week as saying al-Qaida would be given refuge in lands under Taliban control. Some reports suggest that fighters from Swat have entered another neighbouring district, Shangla.
There was further international concern after militants ambushed a convoy of soldiers deployed to prevent extremists moving into Buner, killing a police officer. A Pakistani leader issued what he said was a final appeal to Taliban militants to retreat to their Swat Valley stronghold and salvage the peace deal, which has been sharply criticised by the US.
The government agreed in February to impose Islamic law in Swat and surrounding areas of the north-west in return for a ceasefire that halted nearly two years of fighting between militants and Pakistani security forces.
But hardliners have seized on the concession to demand Islamic law, or sharia, across the country, and the Swat Taliban used it to justify its push into the adjoining Buner district.
The government of Pakistan's North West Frontier province has convened a meeting with heads of ruling and opposition parties to decide how to respond. "Those who took up arms must lay them down. Those who went to Buner, they must get out of Buner," said Iftikhar Hussain, provincial government spokesman and a leader of the ruling Awami National party, before the meeting. "This is the only way, and we are asking them for the last time."
Government leaders have warned they will use force if the militants – who have beheaded opponents, torched girls' schools and denounced democracy as "un-Islamic" – continue to challenge the Pakistani state. But they have sought to counter violence with dialogue and peace deals that critics worry only grant extremists impunity, legitimacy and the time and space to muster more forces.
Pakistan's prime minister, Yousuf Raza Gilani, said today that peace agreements were an important tool but warned that the government would "react" if militants continue to challenge its writ. He said the army was ready to take any action requested by the authorities."The defence of the country is in strong hands. I want to say that our nuclear program is also in safe hands," Gilani told parliament.
The disputed peace accord covers Swat, Buner, Shangla and other districts in the Malakand Division, an area of about 10,000 square miles near the Afghan border and the tribal areas where al-Qaida and the Taliban have strongholds.
Locals said the ambush had forced the Frontier Corps to retreat. "Now Buner is ruled by the Taliban," one resident told the Guardian by phone. "They go anywhere they want."
Two weeks ago the Taliban occupied a Sufi shrine in Buner, accusing locals of using it for "un-Islamic" practices. On Wednesday they swept through the main town, Daggar. Gun-toting militants looted aid agency offices, stole western-funded vehicles and forced police to retreat into their stations.
After talks with district officials, Taliban commanders promised to keep their fighters off the streets yesterday. But they continued with FM radio broadcasts emphasising Islamic teachings and warning men not to shave their beards. "We are here preaching for sharia. We don't want to fight," a commander named Khalil told AP.
The fall of Buner does not pose an immediate threat to Islamabad. The capital lies across a mountain range and the river Indus. But the speed and aggression of the latest advance has stoked a sense of panic among Pakistan's western allies and, increasingly, at home.
On Wednesday the US secretary of state, Hilary Clinton, accused President Asif Ali Zardari's government of "basically abdicating to the Taliban and the extremists". After an outcry from Pakistani officials, she modified her tone yesterday, conceding there was an "increasing awareness" of the threat within government circles.
Sam Zarifi of Amnesty International said the government had left the 650,000 residents of Buner, particularly women and children, "at the mercy" of the Taliban.
The army spokesman, General Athar Abbas, said western fears were "overblown" and called for patience in dealing with the militants. Taliban violence was swinging divided public opinion against the militants, he said. "We are giving them enough rope to hang themselves."
A new sense of urgency is gripping Pakistan's political class, where it has been fashionable to call the fight against the Taliban "America's war". The opposition leader, Nawaz Sharif, urged the government to contain the militants within Swat.
A more surprising statement came from Maulana Fazlur Rahman, the leader of the pro-Taliban Jamiat Ulema-e-Islam party, who warned the national assembly on Wednesday: "If Taliban continue to move at this pace they will soon be knocking at the doors of Islamabad."
There is little sense yet of a concerted effort to push back the militants, who have exposed the fragility of the federation and resurrected fears that the country is heading towards break-up.
The Buner assault is likely to strain the controversial Swat peace accord. In exchange for peace, the provincial government, headed by the secular Awami National party, agreed in February to introduce sharia law in Swat and the Malakand Division.
Since the deal, the Taliban have established control over much more than the judicial system.
In Mingora, the valley's commercial hub, police have been reduced to directing traffic and secular politicians have fled, many under death threats.
At the nearby Taliban headquarters in Imam Dehri, the Taliban spokesman, Muslim Khan, told the Guardian that their goal was the establishment of an Islamic caliphate – first in Pakistan, then across the Muslim world.
"Democracy is a system for European countries. It is not for Muslims," he said. "This is not just about justice. It should be in education, health, economics. Everything should be under sharia."
If the Swat deal collapses the army is likely to reactivate up to 15,000 security forces currently posted to the valley. Tensions are starting to show.
This week the Taliban kidnapped four soldiers. Gen Abbas said negotiations were under way for their release.