Taleban supporters are in plain sight in Mingora, in the Swat valley
Pakistan has announced a "permanent ceasefire" with Taleban rebels in the north-western Swat valley.
Syed Mohammad Javed, commissioner of Malakand, which includes Swat, revealed the deal. But the Taleban say they are still deciding whether to accept it.
A spokesman said they would wait to see whether a deal to implement Sharia law in Swat was honoured by the government.
Swat, once one of Pakistan's most popular holiday destinations, has long been blighted by militant violence.
Last week a deal was struck which arranged a 10-day ceasefire and saw an agreement by the Pakistani government for Sharia law to be implemented in the Swat area.
The Taleban spokesman, Muslim Khan, told the BBC on Saturday that the rebels were reviewing government progress on the implementation of Sharia law in the district.
"Six of the 10 days of this announcement still remains, when the sixth day comes to an end we will see what will be done by the government of launching Sharia law, then we will decide," he said.
Reports said the prospective deal was arranged when local Taleban met a senior elder appointed by the government to negotiate, Sufi Mohammad, to discuss ceasefire terms.
Sufi Mohammad, a pro-Taleban cleric, is the father-in-law of Maulana Fazlullah, who has been waging a violent campaign to impose Sharia in the region.
Following the deal struck last Sunday to agree to introduce Sharia law, the government's announcement suggests negotiations between Maulana Fazlullah and Sufi Mohammad could now be leading to a more permanent deal.
"They [the Taleban] have made commitment that they will observe a permanent ceasefire and we'll do the same," Mr Javed, the commissioner of Malakand, told reporters on Saturday.
He said that the army would scale back its operations in the valley and asked residents who left Swat because of the fighting to return home.
Schools for boys would reopen, although school for girls would remain closed, Mr Javed added.
The BBC's Pakistan analyst Owen Bennett-Jones says the schools announcement, and the decision to pull government troops out of Swat amounted to a capitulation by the Pakistani state.
The territory, a former princely state only absorbed into Pakistan in 1969, was effectively being given up to militant control, our correspondent adds.
Thousands of people have fled and hundreds of schools have been destroyed in Swat since a Taleban insurgency began in 2007.
The people of Swat have long been caught in the crossfire between the army and the Taleban.
More than 1,000 civilians have died in shelling by the army or from beheadings sanctioned by the Taleban. Thousands more have been displaced.
The Taleban now control the entire countryside of Swat, limiting army control to parts of the valley's capital, Mingora.