Pakistani soldiers have nearly cleared the Taliban from a district 100 km (60 miles) from the capital in heavy fighting in which the militants have suffered heavy casualties, the military said.

Fighting in the Swat valley and the neighbouring districts of Buner and Dir has forced about 1.5 million people from their homes on top of about 550,000 people displaced earlier.

The United States has offered Pakistan $110 million to help the displaced and said it was trying to redress 30 years of 'incoherent' US policy toward the nuclear-armed country.

The military said security forces had made 'considerable headway' in intense fighting in Buner.

'Most of the area has been cleared ... terrorists have suffered heavy casualties,' the military said late on Tuesday.

Emboldened by a February peace pact, Taliban from Swat moved into Buner in early April, clashing with police in a drive to impose hardline rule.

The Taliban thrust into an area so close to Islamabad raised alarm both at home and abroad. The United States criticised the February pact, which authorities hoped would bring peace to Swat, as akin to abdicating to the militants.

akistani action against militants, especially in areas near the Afghan border in its northwest, is an essential part of US plans to defeat al Qaeda and bring stability to Afghanistan.

The army attacked militants in Buner and Dir late last month and launched an offensive in Swat on May 8.

After clearing many Taliban strongholds and supply depots in Swat's mountains, soldiers are battling militants in its towns where many thousands of civilians are believed to be hiding.

Though politicians and members of the public broadly back the offensive, support will quickly evaporate if many civilians are killed or if the displaced languish in misery.

The United Nations has warned of a long-term humanitarian crisis and called for massive aid for the displaced.

The White House said the United States would provide $100 million in humanitarian aid such as food, tents, radios, generators and other items and that the US Defense Department would give a further $10 million in unspecified assistance.

'Providing this assistance is not only the right thing to do but we believe it is essential to global security and the security of the United States and we are prepared to do more,' US Secretary of State Hillary Clinton told reporters.

Clinton also described the last three decades of US policy toward Pakistan -- which would include the eight years of her husband Bill Clinton's presidency -- as 'incoherent,' saying the United States had worked with Pakistan to arm the mujahideen fighters who helped drive the Soviet Union from Afghanistan in the 1980s only to effectively abandon both countries.

She said US President Barack Obama wanted to forge a long-term partnership with Pakistan to confront Al Qaeda militants who fled to Pakistan from Afghanistan, where they plotted the Sept. 11 attacks.

The United States has applauded Pakistani resolve to fight what some US leaders have called an 'existential threat' to the country. Pakistan says more than 1,000 militants and more than 50 soldiers have been killed in the fighting.

There has been no independent confirmation of the estimate of militant casualties. Reporters have left Swat and communications with residents still there have been disrupted.

About 15,000 members of the security forces are fighting between 4,000 and 5,000 militants in Swat, the military says.

The fighting has worried investors in Pakistani stocks and the market ended 0.10 percent, or 7.13 points, lower at 7,060.72 in thin trade.

President Asif Ali Zardari told the Sunday Times that Swat was just the beginning and the army would next move against militants in the Waziristan region on the Afghan border. -