May 8 (Bloomberg) -- Pakistani troops backed by fighter jets and military helicopters battled Taliban militants in the Swat Valley after Prime Minister Yousuf Raza Gilani ordered an “all-out assault” to retake control of the northwestern region.

“Earlier, the military was only responding to the attacks by the militants, but after the prime minister’s orders, we are on the offensive in a fully fledged operation,” chief military spokesman Major General Athar Abbas said in Rawalpindi. “The operation will continue till all the militants are eliminated.”

Gilani and army chief General Ashfaq Parvez Kayani yesterday announced a stepped-up assault to defeat the rebels, who last month advanced to within 100 kilometers (60 miles) of the capital, Islamabad. The army, which estimates there are about 4,000 militants in Swat, said it killed 140 in the past 24 hours in the Buner, Swat and Lower Dir districts.

President Barack Obama is pressing Gilani’s government to wrest control of the mountainous border area from extremists, including al-Qaeda terrorists using Pakistan as a base for striking at U.S.-led forces in neighboring Afghanistan. The militants have beheaded local officials and burned schools in their almost two-year fight to impose Islamic law in Swat and neighboring areas.

“The nefarious activities of militants to disrupt security have forced us to take decisive action,” Gilani said in a televised speech to the nation late yesterday. “To protect the homeland, armed forces have been called in to eliminate the terrorists.”

Bin Laden Dead

Pakistani President Asif Ali Zardari said in an NBC interview he thinks al-Qaeda leader Osama bin Laden is dead.

“I have a strong feeling and have some reason to believe that, because I’ve asked my counterparts in the American intelligence agencies, and they haven’t heard of him since seven years,” Zardari said. “You tell me. You lost him in Tora Bora,” he said, referring to the 2001 U.S. attack on the al- Qaeda Afghan stronghold following the Sept. 11 attacks.

Zardari’s remarks from an NBC interview yesterday during the Pakistani president’s visit to Washington to meet with Obama are scheduled to be broadcast May 10 on NBC’s “Meet the Press.”

Taliban ‘Overreached’

The Taliban “overreached” with their offensive into Buner, U.S. Defense Secretary Robert Gatestold reporters in the Afghan capital, Kabul, yesterday. “It served as an alarm for the Pakistani government that these violent extremists” pose a significant threat, he said.

Among the militants killed since the military began its offensive on April 26 was the eldest son of a prominent pro- Taliban cleric, who died in Swat yesterday. Kifayatullah, one of cleric Sufi Muhammad’s 14 sons, was killed when mortar shells hit his house, Rizwanullah Farooq, his brother, said by telephone from Swat.

A February peace accord negotiated by Muhammad that saw Islamic law introduced in Swat and neighboring districts collapsed last month.

“There is no hope of resuming peace talks,” Farooq said. “Nobody can talk when the operation is killing people and destroying houses.”

Gilani said in the future there will be “no compromises” with the militants.

‘On the Run’

The rebels “are on the run and they are trying to block the exodus of civilians from the area,” Abbas said. In Buner, the military operation is slow because militants are using civilians as human shields. The army has taken control of Khawazakhela town in Swat and destroyed rebel training centers, Abbas said.

As many as 200,000 people have fled the conflict in the Swat, Lower Dir and Buner districts in the past few days and another 300,000 are already on the move or about to move, according to the transcript of a statement by Ron Redmond, a spokesman for the United Nations High Commissioner for Refugees, in Geneva today. This is in addition to 550,000 people who had fled from the country’s tribal areas bordering Afghanistan and in the North West Frontier Province since August, he said.

“The new arrivals are going to place huge additional pressure on resources,” he said.

Relief workers “can no longer reach the areas most affected by the fighting on account of the volatile situation,” Benno Kocher of the International Committee of the Red Cross said in a statement yesterday.

To contact the reporter on this story: Khalid Qayum in Islamabad at kqayum@bloomberg.net.

Last Updated: May 8, 2009 13:49 EDT