Al Jazeera's Imran Khan, reporting from Islamabad, said the Taliban could see the bounties as a success.

"What analysts are telling us is that by giving this kind of reward, what you're doing is upping the value of people like Fazlullah and turning them into totems, symbols of resistance.

"You have to question whether anybody is actually going to turn Fazlullah in for that kind of money. It's a very poor area. Anyone with access to that cash will immediately be suspected of spying and the Taliban has killed anyone they suspect of spying in the valley before."

Military offensive

Fazlullah's campaign finally prompted the Pakistani government to send troops into the Swat valley in the North West Frontier Province (NWFP) with an aim to eliminate the Taiban fighters and restore order.

The military has said that more than 1,200 fighters have been killed since the army began the offensive on April 26 in the districts of Swat, Lower Dir and Buner.

In depth


 Video: Swat's fleeing Sikhs
 Video: Inside the war zone in Mingora city
 Pictures: Lahore bombing
 Diary: Imran Khan
 Riz Khan: Obama's 'AfPak' strategy
 Riz Khan: The battle for the soul of Pakistan
 Interview: Asif Ali Zardari
 Q&A: The struggle for Swat
 Your views: Crisis in Swat
 The fight for northwest Pakistan
Talking to the Taliban
Pakistan's war
 Witness: Pakistan in crisis

About 2.4 million people have fled the fighting. There are no figures of civilian casualties, but some of the displaced have told of innocent relatives being killed.

Asif Ali Zardari, the Pakistani president, visited a camp for displaced families on Friday, saying they would soon be able to return home.

"The day is not far off when you will return in a better atmosphere than that which forced you to abandon your homes,"

The United Nations has called for more support to help Pakistan cope with the humanitarian crisis.

John Holmes, the UN humanitarian chief, said an appeal launched a week ago for $543m was only 21 per cent funded.

A majority of the displaced have been provided shelter by families outside the
conflict zone, and aid workers fear the burden will become too great for the host communities' scarce resources.

"Without urgent assistance there is a real fear that impoverished host communities could contribute to another wave of internal displacement," Graham Strong, World Vision's country director in Pakistan, said.