People favour Sharia
The Tahrik-e-Nafiz Shariat Muhammadi, or the Movement for the Enforcement of Islamic Law, is expected to demand that sharia be introduced in the area, a demand the local government is thought likely to agree to as part of the deal.
"This is not the first time Sharia law has been imposed in this area," Al Jazeera's Kamal Hyder said reporting from Pakistan. "In the mid 90's it was imposed following violent protests by the movement for the implementation of sharia law there, and the government relented.
"The majority of people in that area are very conservative. They have been demanding the implementation of sharia law because they say the other law takes far too long to dispense justice, and the demand is for swift justice.
"However this will not mean that the groups opposed to the government will be dispensing that justice. The government of Pakistan will appoint the judges."
The agreement is likely to draw criticism from the US, which is battling Taliban and al-Qaeda groups in the area. The US has said that such deals only serve to allow fighters to regroup.
But Pakistan says that force alone cannot defeat all opposition groups and that talks must take place, although several past deals have failed.
Unlike regions under tribal rule in the northwest, where al-Qaeda and Taliban fighters have found safehavens to launch attacks both in Pakistan and Afghanistan, the Pakistani government has typically controlled the Swat Valley.
Conservative groups aiming to introduce sharia have been fighting government troops in the region since 2007.
The groups took control there after a 2008 peace deal collapsed, within months of being signed.
Much of the violence, which has left hundreds of thousands of people homeless, has been blamed on the Taliban in Swat, headed by Mullah Fazlullah, the son-in-law of Maulana Sufi Muhammad, the leader of Tahrik-e-Nafiz Shariat Muhammadi.
Regaining control of the Swat Valley - which was formerly a popular tourist destination - is a significant test for Pakistan's civilian leadership.
Separately on Monday, 15 people were killed when a suspected US drone fired two missiles at a target on Pakistan's border region with Afghanistan.
A security official in Pakistan's Kurram tribal region said that a building used by the Taliban was destroyed in the attack.
"Afghan Taliban were holding an important meeting there when the missiles were fired," an intelligence official in the area said.
It is the first suspected attack by a US air raid in the tribal area since August last year.