Waving black and white flags and chanting “God is great!” thousands of men marched through the streets of the main town in Swat Valley yesterday, led by a hardline cleric who called for peace in return for the enforcement of Islamic law.

“I have come here to establish peace and I will not leave until this has been achieved,” Sufi Mohammad, the aging, white-bearded leader of an outlawed Islamic movement, told his supporters in Mingora, the main town in the area.

On Monday the regional government in northwest Pakistan struck a peace deal with Mr Muhammad, who was released recently after spending six years in jail for leading thousands of his supporters to Afghanistan to fight American forces in 2001.

In return for the imposition of Sharia, the pro-Taleban cleric is expected to persuade Mullah Fazlullah, his son-in-law, who is spearheading the insurgency, to lay down arms.

“It will be a good step if it ends the bloodletting,” Mohammed Jaffer, whose grocery business has suffered hugely as a result of the fighting, said as he watched from his shop doorway. It is a common sentiment in Swat, desperate for peace after years of violence. But reining in Mullah Fazlullah will be no easy task.

The firebrand cleric, 33, has turned what was once a favoured tourist destination into a byword for terror. The Taleban in Swat has conducted a campaign of beheadings, lynchings and bombings, and although Mullah Fazlullah announced a ten-day ceasefire on Sunday, analysts said that there was no indication that he would agree to put his weapons aside.

A similar deal last year collapsed in a few months and was blamed for giving the insurgents time to regroup. Many people — including Western politicians — accuse the Government of surrendering to terrorism and abdicating its responsibility to protect the lives and property of the people.

“This deal shows that the Pakistani Army has been defeated by the militants and the State is incapable of retaining control over its territory,” Athar Minallah, a leading lawyer and a former provincial minister, said.

At the end of 2007 Islamabad sent thousands of troops to quell the insurgency as the Taleban expanded its influence from the semiautonomous tribal areas into parts of the North West Frontier Province of which Swat, with a population if 1.3 million, forms a part.

Even though Swat does not border Afghanistan, Mullah Fazlullah pledges allegiance to Mullah Omar, the spiritual leader of the Afghan Taleban movement.

Security officials say that large numbers of fighters from Waziristan, along with Uzbeks and Chechens, have joined the insurgents in Swat. That means that as many as 8,000 well-armed militants, allegedly funded by Arab charities, have been fighting government forces in Swat.

Mullah Fazlullah is also known as Mullah Radio for his sermons broadcast on a pirate radio station. He has declared a holy war against the Pakistani Government and in effect established a parallel Islamic regime.

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