According to Salman, the Taliban were in regular contact with the five militant leaders for the first five days but started to suspect three days ago that the negotiators had been arrested.

Abbas denied the Taliban claim that Muslim Khan and other rebel leaders were arrested during peace talks.

'We have already declared that no talks will be held with any terrorist,' Abbas said. 'If they want to surrender, they should lay down their arms and hand themselves to civil administration or law enforcement agencies.'

The capture of Muslim Khan, who is a close aide of the Taliban chief in Swat, Maulana Fazlullah, is considered a major success in the government's offensive against militants in Swat. However, Fazlullah remains at large.

The government said its troops have killed nearly 2,000 rebels and regained control over much of the Swat Valley, which is about 140 km northwest of Islamabad.

The army said Friday in a statement that the security forces killed two more militants in ongoing operations in the region. They also arrested at least 34 militants from Swat and neighbouring Dir district.

'Security forces carried out a search operation at Kad near Sardari and killed two terrorists,' an army statement said.

Meanwhile, Interior Minister Rehman Malik warned militants to lay down their arms or face the consequences. In comments carried on the Geo television, Malik said Pakistan's army had broken the back of the militant movement in just three months in an unprecedented operation.