The fighting erupted when paramilitary Frontier Corps (FC) launched a search operation in the Malik din Khel area of Khyber.

Mutahir Zeb, the top administrative official of Khyber, said militants from Lashkar-e-Islam were involved.

"At least 34 militants and three soldiers were killed during an encounter," a paramilitary statement said. There was no immediate independent confirmation of the death toll as the area is off-limits to journalists and aid workers.

"Security forces responded effectively and have cleared the area of militants," it said.