Dozens of paramilitary troops and police surrendered their weapons to militants and retreated from the mountain town of Kalam in the Swat Valley - dubbed Pakistan's Switzerland - early Wednesday, a police official said.
Announcements about the advance were made on a pirate FM radio station run by cleric Mullah Fazlullah, as militants hoisted their party flag on police stations and government buildings, and distributed sweets.
President Pervez Musharraf declared an Emergency on Saturday, saying it was necessary to tackle Al-Qaida and pro-Taliban rebels.
He also cited repeated interference in government by a hostile judiciary. The militants' advance into Swat was one of the key factors, indicating that rebels are branching out into new areas from their traditional base in the troubled tribal belt that borders Afghanistan.
The government moved 2,500 troops into Swat last week to counter Fazlullah, who is also known as "Mullah Radio" for his speeches on his private radio station, in which he calls for a holy war on authorities.
Officially, more than 150 militants have been killed in clashes with security forces in the past week. But the militants have hit back in recent days.
Before taking Kalam, which lies at the end of the valley, they captured the town of Bahrain, a strategic town poised over the raging Swat river, having seized the town of Madyan later on Tuesday, officials and residents said.
"There was no fighting, police had already vacated their post in Bahrain, and later retreated to Kalam when they came to know the militants were heading towards their police station," the police official said.
But Fazlullah's aide, Maulana Shah Dauran, said in a radio address that militants also took control of a paramilitary base in Kalam manned by a platoon.
Some 40 Frontier Corps soldiers had left the paramilitary base before the militants arrived, residents said.
Residents said some 150 turbaned militants were roaming through Kalam, chanting Allah-o-Akbar (God is greatest) and hoisting their black and white flags on key government buildings.
One flag stood atop a state guesthouse for important visitors, they said. There was no comment from the administration in Mingora, the main town in Swat valley, and top officials in Peshawar, the capital of North West Frontier Province.
An official privately admitted the militants were in control of around 70 percent of the valley's 94-kilometre (60-mile) stretch from Sangota to Kalam.
The government hold was confined to Mingora and the nearby town of Saidu Sharif, which has the valley's lone airport, the official said.
Analysts say the militants' advance mirrors a Taliban style march seen in neighbouring Afghanistan in 1994-1996. The Taliban was ousted by a US-led invasion in 2001. Taliban militants in Afghanistan have also staged wildfire raids on a series of districts in recent weeks, although they have been quickly pushed out again by Afghan government forces.
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