At least nine soldiers have been killed in clashes with hundreds of militants in Pakistan's north-western tribal region of Orakzai, army officials say.
About 30 militants were also killed, officials say, but this figure has not been verified by the Taliban.
The fighting began after insurgents attacked an army patrol in the densely forested Mandati area of the region.
Violence has risen in Orakzai since the army drove militants from strongholds in South Waziristan, Swat and Bajaur.
Military officials described the battle between the insurgents and the army as "fierce" and said that two officers were among the dead.
It is virtually impossible to confirm reports of casualties as the military zone is barred to journalists.
Local residents say the army had set up checkpoints in the Daburi region on Sunday. They then started patrols in the forests close by, including in Mandati
The army launched an offensive in South Waziristan last year to clear the volatile area of militants. But correspondents say that many insurgents simply shifted to adjacent areas.
But the BBC's Syed Shoaib Hasan has reported that there is strong evidence the Taliban is regrouping and has started to make its presence felt in areas such as the Swat valley.
The attack comes as the US says it has evidence the Pakistani Taliban was behind the attempted car bombing in New York's Times Square.
A Pakistani-born US citizen has been charged with the attempted bombing.
Faisal Shazhad, 30, from Bridgeport, Connecticut, has admitted to receiving bomb-making training in the Pakistani region of Waziristan, US prosecutors say.