Pakistan lost six soldiers to a militant rocket attack in the nation's trouble northwest Sunday, as the government expands its bloody counter-insurgency against the Taliban.

Earlier in the day, Islamabad said its warplanes and helicopter gunships killed 11 suspected Taliban fighters during a fierce exchange in the region.

Though the government has declared many small victories in its two-month-old offensive against the Taliban, Sunday's violence is emblematic of a conflict in which the military has been unable to deliver a knock-out blow against a mobile foe.

Indeed, despite a massive military campaign which has reportedly killed more than 1,500 militants, the Taliban continue to launch successful counterstrikes and suicide bomb attacks in the northwest and elsewhere.

While the army has had some success in Swat, it is now expanding into South Waziristan, which borders Afghanistan and has long been a staging area for Taliban attacks against NATO.

In a bid to ramp up the pressure on militants in the rugged area ahead of a full-scale offensive there, Islamabad recently announced a bounty on the head of local Taliban boss Baitullah Mehsud, worth 50 million rupees (about $700,000).

Mehsud has been blamed for a series of suicide bomb attacks in the past month that have killed at least 100 people. The U.S. State Department has already pledged a reward of $5 million for his arrest or death.

While Pakistan once pursued a policy of co-existence with powerful tribal militias in the northwest, a spring Taliban offensive which came within 100 kilometres of the nation's capital pressed the government to respond with force.

Mounting pressure from Washington and India has also forced Pakistan to crackdown on domestic warlords.

In Lahore, Prime Minister Yousuf Raza Gilani said Sunday that the government would continue to crack down harshly on militants.

"The nation wants peace and the elimination of terrorism in the country, so this is not the time for talks but for a final decision (against terrorism) and the decisive action is on," he said.

However, there is growing concern that the army is locked in a high stakes game of whack-a-mole: when the government gains control of one area, mobile militants launch simply shift targets and launch attacks in other spots.

On Friday, a Taliban fighter blew himself up in Pakistan-controlled Kashmir, killing two soldiers. It was the first time militants had launched an attack in the area.

Not long after the blast, Taliban boss Mehsud told The Associated Press that the assault was undertaken to prove that his fighters had not been weakened by several days of heavy fighting in South Waziristan.

And while Washington has praised Pakistan's determination in flushing out militants in the Swat Valley, measuring any lasting success is difficult.

So far, the costs have been very real: along with thousands of deaths, more than two million people have been displaced because of fighting in the Swat Valley and elsewhere.

In Peshawar, known as a gateway city to the northwest, refugees and locals say that the Taliban still commands fear and respect in the region, CTV's South Asia Bureau Chief Janis Mackey Frayer reports.

Recently, fear of the Taliban's widening influence has overtaken Peshawar's shops, offices, and schools, and the locals now don conservative clothing.

Another sign of the Taliban's strength can be seen in the activities of a local charity with tacit ties to the group. On a recent day, the group's tent was overflowing with refugees seeking aid, Mackey Frayer said.

"The campaign yet to take out a high profile target," she noted. "Millions are on the move. Patience is fading (and) sympathy is flexible."