The fighting erupted late on Wednesday in the Loi Sum area in Bajaur, a reputed sanctuary for al-Qaeda and the Taliban fighters.

"We have reports of 25 militants. Two paramilitary soldiers were also killed and three wounded," a senior government official told the Reuters news agency on condition of anonymity.

An officer from the paramilitary Frontier Corps said that 300 to 400 fighters, backed by local sympathisers, participated in the attack on the post located 15km west of Khar, the region's main  town.
 
They were mostly armed with AK-47 assault rifles, rocket launchers and grenades, he said.

Maulvi Omar, a Taliban spokesman, said that fighters killed 18 soldiers while only two Taliban fighters had died.

'Full might'
 
"The fighting will continue until the troops are withdrawn from Loi Sum. We will respond with full might," Omar said in a telephone call to local reporters from an unknown location.

According to security officials, helicopters hit suspected fighter positions on Thursday and fresh shelling resumed in the morning. Markets and offices were closed in Khar and traffic was thin.
 
Loi Sum lies on the strategically important road leading towards the northwestern city of Peshawar.
 
Pro-Taliban fighters had exercised complete control over Loi Sum since the withdrawal of troops earlier this year, using it as their main base for operations in the area, local residents said.

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