"They keep violating every agreement and if this goes on, definitely there will be no deal, no ceasefire," Muslim Khan, the Pakistani Taliban's spokesman in neighbouring Swat, said.

"This is not our army, this is not our government. They're worse enemies of Muslims than the Americans. They're US stooges and now it's clear that either we'll be martyred or we'll march forward."

Continuing violence

In depth


 Video: Obama says Pakistan is toughest US challenge
 Video: Turning to the Taliban
 Video: Thousands flee Pakistan Taliban clashes

Media vacuum in Swat valley

Swat: Pakistan's lost paradise
Talking to the Taliban

Pakistan's war

Sohail Rahman, Al Jazeera's correspondent in Islamabad, said the explosion in Peshawar was worrying as it happened so close to the provincial capital.

He said: "The last 36 hours have seen heavy military presence in the northwest and pitched battles in the strategic town of Mingora.

"The town has been overrun by up to 200 armed fighters. Pockets of resistance have emerged over the last 48 hours after the military tried to win over the area of Buner.

"Mingora is still under curfew. Refugee camps have been set up south [of Mingora] as hundreds of civilians are pouring into that area to flee the fighting.

"Neither aid agencies nor government relief agencies can get in there at all because of the instability of the area and the ongoing fighting."

Sharia deal

The February pact has alarmed US officials who worry that Swat will turn into a haven for fighters near Afghanistan, where US and Nato troops are also battling the Taliban.

Obama will present his strategy for defeating al-Qaeda and the Taliban on Wednesday [EPA]
US officials have also accused the Pakistani government of "abdicating" to the Taliban.

Asif Ali Zadari, Pakistan's president, will be meeting Barack Obama, his US counterpart, in Washington on Wednesday and he is expected to ask him for more support in the fight against the Taliban. 

But also on the agenda will be Washington's concern about the security of Pakistan's nuclear arsenal, and America's fear that it is losing the war against the Taliban and al-Qaeda.

On Saturday, the government in the North West Frontier Province (NWFP) announced the formation of an Islamic appeal court, or "Dar-ul-Qaza", saying that the court's establishment would put the onus on the fighters to lay down their weapons.

The creation of the court was among the demands made by Tehrik Nifaz Shariat-e-Muhammadi, a group led by Sufi Muhammad, an influential local religious leader who mediated the deal between the government and the Taliban.

But it has done little to stop the violence. On Sunday, two government workers were killed by suspected Taliban fighters.

"There has been a war of words since the announcement ... by provincial government that they were going to implement an Islamic court as per agreement ... and the Taliban factions, led by Sufi Muhammad, [complained they] were not contacted," said Rahman.

"The agreement is in tatters. If the Taliban is out on the streets you can say those agreements are dead and buried.

"There is now more pressure on the military to go in and clean it up if they can," he said.