Pakistani soldiers closed in on a Taliban headquarters in Swat, the military said on Tuesday, as the United Nations called for help for hundreds of thousands of people displaced by the fighting.
The offensive in Swat, 130km northwest of Islamabad, is seen as a test of the government's commitment to face up to a growing Taliban insurgency and comes after the United States accused it of "abdicating" to the militants.
The fighting has caused a civilian exodus from the valley, once a tourist destination, raising fears of a humanitarian crisis.
At least 360,000 people have left their homes in recent days and in all about 500,000 are expected to flee. They join about 600,000 people displaced earlier from Swat and other areas because of fighting since August.
Helicopters flew soldiers into the remote Peochar valley, where the Taliban have a headquarters, a military spokesman said.
Residents said troops had also been seen moving on the ground towards Peochar, a side valley running northwest off the main Swat valley.
The offensive was launched last week when President Asif Ali Zardari, the widower of former prime minister Benazir Bhutto, was in Washington assuring a nervous US his government was not about to collapse and was committed to fighting militancy.
A pact in Feburary aimed at ending violence in Swat, that effectively handed the militants control, had raised fears of a gradual Taliban takeover of more areas in the nuclear-armed country, which is vital to US efforts to defeat al Qaeda and stabilise Afghanistan.
Interior Ministry chief Rehman Malik said on Monday 700 Taliban and 20 soldiers had been killed.
UN warns of humanitarian crisis
Most political parties and many members of the public support the offensive but that could change if civilians displaced in what the government say is the country's largest-ever internal migration are seen to be suffering or if many are killed.
The United Nations has warned of a protracted humanitarian crisis for a country already being propped up by a $US7.6 billion International Monetary Fund loan.
UN High Commissioner for Refugees Antonio Guterres called on international support for the humanitarian effort.
The refugee agency has opened stockpiles of supplies to help the displaced and is airlifting in tonnes of additional emergency supplies.