"He has been involved in activities which help militancy and militants and sabotage government efforts to combat them."
Sufi Mohammed's two sons, Ziaullah and Rizwanullah, were reportedly arrested with him during a police raid. A third son, a teacher, was killed in a Pakistani military bombardment in May.
"Maulana Sufi Mohammad was arrested from the Douran Pur area with his two sons and a commander on the outskirts of Peshawar," Abdul Hameed Khan, a police officer, said.
Sufi Mohammed leads a group known as the Tehrik Nifaz-e-Shariat Mohammedi, or the Movement for the Enforcement of Islamic Law. He was jailed in 2002 but was freed last year after he renounced violence.
He is the father-in-law of Maulana Fazllulah, the leader of the Taliban in Swat.
|More than 1,800 Taliban fighters have
been killed, the military says [File: EPA]
Al Jazeera's Kamal Hyder, reporting from the capital, Islamabad, said: "Many people here will tell you that Sufi Mohammed was an arbiter of peace.
"There has been much disagreement over who broke the [peace] deal."
After the peace deal with the government collapsed in April, the military launched a major offensive aimed at pushing pro-Taliban fighters out of the Swat, Lower Dir and Buner districts of NWFP.
The fighting left more than 1,800 Taliban fighters dead, according to the military, but analysts said that many of them simply melted away into other areas in the face of the military onslaught.
Although Yusuf Reza Gilani, Pakistan's prime minister, last month declared that the Taliban fighters had been "eliminated" in the region, frequent skirmishes continue.
At least two soldiers and 14 pro-Taliban fighters were reportedly killed in clashes in NWFP on Sunday, officials said.
Pakistani fighters jets hit suspected Taliban positions in Lower Dir where troops have been carrying out search and clearance operations, security officials said.
"At least 13 militants were killed and 15 of their hideouts destroyed in the bombing carried out by fighter jets in Lower Dir," an official told the AFP news agency.