Pakistan's President yesterday signed an accord to put part of the country under Islamic law as part of efforts to end a Taliban insurgency, despite fears that it would encourage extremism.

President Asif Ali Zardari's move formalises a controversial deal between a pro-Taliban cleric who led thousands of supporters to fight against US troops in Afghanistan and the government in North West Frontier Province.

The deal applies to Malakand, a district of around three million people in the province that includes the Swat valley.

The central government lost control in Swat, a former ski resort and jewel in the crown of Pakistani tourism, after cleric Maulana Fazlullah launched a campaign to enforce Taliban-style sharia.

Militants beheaded opponents, bombed schools and fought government forces, prompting tens of thousands of people to flee.

"God willing it will have a positive impact on the situation in Swat," said Interior Ministry chief Rehman Malik of the agreement.

"It is hoped that those who wanted this law in Swat will now surrender their arms and also bring the peace," he told reporters.

However, critics say the deal opens the floodgates to the "Talibanisation" of swathes of Pakistan, and the policy came under widespread criticism when a video emerged earlier this month of a veiled woman being flogged in public.

The White House expressed disappointment at the President's move to formalise the deal, saying it infringed human rights.

"We are disappointed the Parliament did not take into account legitimate concerns around civil and human rights," said spokesman Robert Gibbs.

Islamic courts have been operating in Swat since last month, but the exact legal significance of the local deal has been shrouded in debate.

Residents in Swat still retain recourse to appeal courts under the federal judicial system, a mixture of colonial British law and sharia regulations.