Pakistani authorities and the local Taliban [Images] have agreed to a ceasefire in the troubled Swat valley following peace talks between militants and religious hardliners, a top official said on Saturday.

Syed Mohammad Javed, the commissioner for Malakand division which includes Swat, told reporters that the security forces and the Taliban would observe the truce. He made the announcement after meeting Maulana Sufi Mohammad, a hardline cleric who is negotiating with the militants.

Asked how the Taliban would be disarmed, Javed said talks are underway with the militants on this issue. The Taliban had unilaterally announced a 10-day ceasefire on Sunday to facilitate peace talks which began after Sufi Mohammad's group, Tehrik-e-Nifaz-e-Shariah Mohammadi, reached an agreement with authorities to enforce Islamic laws in Swat and Malakand.

Javed said the government will take more steps to restore peace in the region. "You will hear more good news in the days to come," he said. He appealed to people, who had left Swat valley due to fighting, to return to their homes, saying the administration had provided funds to rehabilitate them.

Officials say over 500,000 people have fled Swat as a result of the fighting that erupted after troops launched a crackdown on militants led by Taliban commander Maulana Fazlullah in October 2007. Fazlullah is the son-in-law of TNSM chief Sufi Mohammad.

Schools in Swat would be reopened by Monday and makeshift schools would be set up where the buildings were destroyed by the fighting. Security will also be provided to the schools, Javed said.

However, he evaded a question on the reopening of girls' schools, saying the matter is still being discussed with the Taliban. The militants had last month banned girls' education across Swat.

Most educational institutions in Swat have remained closed for the past few months. Meanwhile, the Taliban in Swat have empowered Sufi Mohammad to hold talks with the government on implementing Shariah or Islamic laws in Malakand division.

"We have full confidence in Sufi Mohammad as his credibility is beyond any doubt," Taliban spokesman Muslim Khan told reporters in Swat. Khan said the Taliban are satisfied with the outcome of talks held so far with representatives of the TNSM.

The people of Swat will soon hear 'good news', he said. The Taliban will show flexibility in its stance if the government implements the peace deal in letter and spirit, he said.

The main objective of the Taliban is the enforcement of Shariah and when this demand is fulfilled, they will have no other dispute with the government or anybody else, Khan added.

Western powers, including Britain and North Atlantic Treaty Organisation, have expressed concerns over the peace deal in Swat between Pakistani authorities and religious hardliners, saying it could embolden militants in other parts of the country to make similar demands for enforcing Shariah.