Pakistan said on Saturday officials had agreed a "permanent" truce with Taliban fighters in the northwestern Swat valley, but a Taliban commander said its own ceasefire would be reviewed next week.

"They have made a commitment that they will observe a permanent ceasefire and we'll do the same," Syed Mohammad Javed, the Commissioner of Malakand, told reporters after meeting with elders in Swat.

Around 1,200 people have been killed and between 250,000 and 500,000 people have fled the valley which lies within the Malakand division of North West Frontier Province.

Last Sunday, Islamist militants called a 10-day ceasefire in the valley as a "goodwill gesture" towards the peace talks. It runs out on Wednesday.

"We heard that the government announced a permanent ceasefire, but we have announced a 10-day ceasefire and we will consider an extension when it ends," Taliban commander Maulana Fazlullah told illegal FM radio.

Western governments, and many Pakistanis, have been alarmed by the government's offer to reinstate sharia law in Malakand if the Taliban agreed to peace.

They fear that a ceasefire could result in another sanctuary in Pakistan where al Qaeda and Taliban militants could move freely, and also worry that Taliban fighters elsewhere in the region will be encouraged by the government's move.

Fazlullah congratulated his men on what he said was the reintroduction of sharia (Islamic law) in Malakand. "Your sacrifices have not gone to waste, but they have proved a success for Pakistan, particularly for Malakand," he said.

Government officials were not immediately available to comment on Fazlullah's statement.

Javed said efforts were being made to persuade the Taliban to allow girls' schools to reopen. Militants had torched around 200 girls' schools in Swat in a campaign against female education. Boys' schools will reopen on Monday.

The ceasefire announcement came a day after Fazlullah met his father-in-law, Maulana Sufi Mohammad, a radical cleric freed by the government to negotiate peace.

IN PRINCIPLE

The deal was agreed in principle on Monday by the government for NWFP and Sufi Mohammad, who then carried back the proposals to Fazlullah. He is said to have forged links with other Pakistani jihadi groups and al Qaeda.

Sufi Mohammad led a revolt in 1994 in an attempt to bring Islamic sharia law back to Swat, and went on to lead an army of thousands of tribesmen in a futile attempt to help Taliban and al Qaeda fighters hold off U.S.-led forces in 2001.

He was arrested after his return to Pakistan and spent six years in jail before the government released him last year.

Richard Holbrooke, special U.S. envoy to Afghanistan and Pakistan, expressed unease over developments in Swat on Thursday and said he had been told by President Asif Ali Zardari that the pact being negotiated with the Islamists was an "interim arrangement" to stabilise the Swat region.

Zardari will not sign off on the re-introduction of Islamic law in Malakand unless peace is assured, according to officials.

Holbrooke visited Pakistan last week on his first tour of the region since being appointed by U.S. President Barack Obama.

Pakistani officials said U.S. officials had urged Paksitan to exert more force in Swat, rather than negotiate.

But the army is fighting Taliban insurgencies elsewhere in the northwest, notably the tribal regions of Bajaur and Mohmand, and wants to be supplied with counter-insurgency equipment.