Army spokesman Maj Gen Waheed Arshad said the security forces targeted the militant compound in Daygan, a village about 15km west of Miranshah the main town in North Waziristan after receiving "credible intelligence that militants were present there."

However, he said he had no information about how many militants were killed in the assault. The compound had been "knocked out," but security forces were still firing artillery, he said.

A local security official, speaking on condition of anonymity because he was not authorised to speak to journalists, said the militants retaliated against the army action and both sides were using light and heavy weapons.

Residents in Miranshah could hear the boom of artillery, and said a stray mortar struck a home, wounding three civilians, including two children.

The security official confirmed that some weapons had hit a home in Daygan, and that three or four people had been wounded.

The assault appears to be the toughest military action since troops that were withdrawn from key checkpoints under a controversial peace deal with pro-Taliban militants in September 2006 were redeployed to North Waziristan about a month ago prompting militants to pull out of the deal and resume attacks.

President Gen Pervez Musharraf, a key ally of the United States in its war on terror, is under pressure from Washington to crack down on militants after US intelligence agencies concluded that the peace deal had allowed al-Qaeda to regroup.

Musharraf yesterday called for a comprehensive strategy to deal with extremism as he rebuffed threats of air strikes on the country by US forces, the foreign ministry said.

Musharraf made the comments at a meeting with visiting US Senator Richard Durbin in the southern port city of Karachi, during which they discussed Pakistan-US relations and counter-terrorism, the ministry said in a statement.