"We will not turn back on our commitment to democratisation which hinders the terrorist organisation," Erdogan said in a statement on Saturday.
'Spiral of violence'
He said "Turkey will not give in to the spiral of violence" unleased by the PKK.
Twelve fighters from the PKK were also killed in the battle in Hakkari province that was sparked by a PKK assault on a Turkish army post near the city of Semdinli, close to the Iranian and Iraqi border. At least 14 soldiers were injured in the attack.
There has been an increase in confrontations between the PKK and the military in the mainly Kurdish southeast in recent weeks, after the PKK called off a year-old unilateral ceasefire, resuming attacks on Turkish forces.
On Wednesday, Turkish troops carried out their first ground incursion into northern Iraq in more than two years, penetrating two kilometres into the Dohuk province.
The so-called "Kurdish opening," the government's efforts to make peace with the Kurds, announced last year, has faltered amid an opposition outcry that Turkey's government is bowing to the PKK, as well as persistent PKK attacks and a judicial onslaught on Kurdish activists.
Erdogan said the PKK was seeking to undermine the government initiative to boost Kurdish freedoms and investment in the impoverished southeast in a bid to peacefully end the conflict.
But Ahmed Denis, a PKK spokesman, called the government measures "just a hoax".
"We will take our operations to all Turkish cities if the government continues its attacks against us.
"Turkey wants to take us towards war," he said on Saturday.
"She is not sincere in dealing with the Kurdish issue and doesn't want to deal with this issue peacefully."
The PKK announced it was increasing attacks on June 1, a day after Abdullah Ocalan, the group's imprisoned chief, said in a statement that his calls for dialogue with Turkey had been ignored and that he was giving his consent to the PKK in northern Iraq to determine which course of action to take.
On Friday, the Turkish military announced that at least 130 members of the PKK had been killed inside Turkey and in air raids on its hideouts in Iraq since violence flared in March.
The military said it lost 43 personnel.
More than 40,000 people have been killed since the PKK launched its armed campaign against the Turkish state in 1984 in the country's southeast.