Supporters of Maulana Fazlullah responded by beheading three paramilitary soldiers and a police officer and displayed their heads in a village near the town of Swat, according to a provincial official.
However, an Al Jazeera cameraman said that pro-Taliban fighters had beheaded 12 soldiers and killed another by shooting him in the head.
The battle broke out on Friday in the Swat valley in North West Frontier Province (NWFP), where Fazlullah has based a campaign to introduce pro-Taliban laws.
Two civilians were killed in the fighting that broke out at the village of Imam Dheri, where Fazlullah has a religious school.
A day earlier, a blast hit a security forces vehicle in Swat, killing about 20 people and wounding another 35, after the arrival of more than 2,000 Pakistani soldiers in the area earlier this week.
This has the potential to become another Red Mosque. In fact, it may even be worse, because Swat is deep in the heart of nowhere, where the Pakistani government does not exert meaningful control. The locals could well view this as an act of aggression.