"The deadline has been extended by four hours until 4pm(1100 GMT)," a senior Pakistani security official said on Monday, confirming a report from a tribal source in South Waziristan.

"Negotiations are continuing," he added. 

Aljazeera's correspondent in Islamabad earlier said the leader of the rebel group of captors, Abd Allah Mahsud, told him about the group's demands in a telephone call. The initial deadline was set at 0700 GMT.
 
The engineers, along with a Pakistani security guard and a driver, were ambushed on Saturday by gunmen as they travelled to a construction site of a dam in South Waziristan - a remote tribal region where al-Qaida-linked fighters are active.

The correspondent said Mahsud called Aljazeera's office in Pakistan on Monday morning and threatened to kill one of the Chinese captives within two hours (by 0700 GMT) if the siege imposed on him and his fighters was not lifted. 

This was a change from the rebel tribe's initial demands, the correspondent added. 

Change in demands

Mahsud had threatened on Sunday to kill the two Chinese captives unless all foreign armed men - probably referring to al-Qaida members held in Pakistan - were released, he said. 

Pakistani forces have launched an
offensive in the Waziristan region 

Pakistan has launched a series of military operations this year targeting al-Qaida-linked fighters from Waziristan, including Central Asians, Arabs and Afghans, killing scores of suspected fighters and capturing others.

A spokesman for the Pakistani information ministry said talks were continuing with the captors.

The two engineers are among between 70 and 80 Chinese working for a Chinese state construction company on the Gomal Zam dam, a Rs12 billion ($203 million) project to generate electricity and store water.

The dam is about 350km west of Islamabad.   

China's state-run Xinhua news agency identified the engineers as Wang Ende and Wang Peng.

An embassy official said no Chinese workers had been evacuated, but they had been advised to restrict their movements.