The convoy was heading to a fort outside Hangu district near the border with Afghanistan when the rebels attacked it with rocket propelled grenades and assault rifles, local police officer Shakirullah Jan told AFP.

He did not however confirm the death toll.

A senior security official, speaking on condition of anonymity, said seven soldiers were killed and 25 wounded in the attack in the neighbourhood of Zargari, outside Hangu city.

Security forces responded by attacking Taliban positions using gunship helicopters and artillery fire in the mountainous region.

"We have reports three militants were killed and 10 wounded in retaliatory fire," the security official said.

Hangu district, which has a history of violence between minority Shiite and majority Sunni sects, is close to tribal areas bordering Afghanistan where pro-Taliban militants are active.

Pakistan's new government is facing growing unrest just five months after defeating US-backed President Pervez Musharraf's allies in elections, with Islamist violence on the rise and political fissures opening up.

Saturday's attack on security forces was the latest incident in a bloody week in the country, including several bombings.

A suicide attack killed 19 people near a protest marking the anniversary of a bloody government-backed raid on the radical Red Mosque in Islamabad six days ago. Although there was no immediate claim of responsibility officials said they were examining a range of possible culprits, including the mosque's former students and Taliban militants based near the border with Afghanistan.

That bombing was followed the next day by a string of six blasts in Pakistan's populous southern port city of Karachi, which saw one person killed and 37 injured.

Pakistani forces launched an operation two weeks ago against Islamic radicals near the northwestern city of Peshawar but the government has yet to convince its foreign backers it is serious about combating militancy.

The government comprises the Pakistan People's Party of former premier Benazir Bhutto, who was assassinated in December last year, and the grouping of ex-prime minister Nawaz Sharif.

Kabul has also put pressure on Islamabad to tackle Taliban rebels based near the border, with a suicide car bomb attack on the Indian embassy in the Afghan capital on Monday leaving 41 dead and around 150 injured.

Afghanistan has repeatedly accused Pakistan's intelligence agencies of supporting the Taliban. Islamabad backed the hardline regime during its 1996-2001 rule but denies any current links to the militia.

Pakistani soldiers