"We tried negotiation, we tried reconciliation, we offered the olive branch but we can't allow the writ of the government to be challenged," he said, speaking to Radio 4's PM programme.
Despite now abandoned attempts to secure a peace deal in and around Swat, the area - close to the border with Afghanistan - has long been riven by tensions.
Some 550,000 people had already been displaced before the current crisis, said UNHCR spokesman Ron Redmond.
Those displaced over recent days have been forced to flee with very little preparation, aid workers say, with families often separated, and doctors in displaced camps report widespread psychological trauma.
Many are fleeing Mingora, the main town in Swat Valley, which was home to several hundred thousand people before the latest fighting began.
Locals say that most of the current fighting is centred on the Kabal and Charbagh areas of Swat, as well as Mingora itself, and fighting is reported in Buner and Lower Dir.
Militant strongholds were hit from the air on Friday as troops conducted operations on the ground.
Pakistani military spokesman Gen Athar Abbas announced the new casualty figures, which could not be verified independently.
Troops had killed 143 rebels in Swat, 25 in Lower Dir and six in Buner, he said, losing seven soldiers in Swat and three in Lower Dir.
"The army is now engaged in a full-scale operation to eliminate miscreants," he told reporters.
"They are on the run and trying to block the exodus of civilians from the area."
Earlier, he told the BBC the military's objective was to eliminate some 4-5,000 militants from the Swat Valley and neighbouring districts of Dir and Buner.
He warned it would be a "drawn-out affair" because militants in Swat had "entrenched themselves".
They were, he added, "making best use of the terrain, which is ideal country for any guerrilla warfare".
The government is confident it has public support for its military campaign but this could easily be eroded if civilian casualties mount, the BBC's Mark Dummett reports from Islamabad.
Threat of hunger
The Pakistani military says it is trying to help displaced civilians by establishing camps where they can seek shelter.
Fighting was reported in Buner
But reports suggest many thousands of civilians under threat from the fighting are unwilling or unable to move.
Roads have been blocked or reportedly mined by the rebels.
The Pakistani military has also imposed an indefinite curfew over swathes of the region.
A local journalist in Mingora told the BBC that electricity and water had been shut down and markets had been closed since Thursday. There was, the journalist said, a real threat of food shortages in the coming days.
While the army accuses the Taleban of holding the people left in the Swat Valley hostage, people who have escaped blame both sides for the conflict and the dire position of the civilians caught between them, our correspondent notes.
The government signed a peace agreement with the Swat Taleban in February, allowing Sharia law to be locally imposed.
But in the face of territorial advances by emboldened Taleban forces, the strategy came under increasing fire from Washington, a key ally.
The US insists the militants pose a direct threat to its security, and has demanded they be confronted.
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