Taliban militants agreed to a "permanent cease-fire" with Pakistan in the country's volatile Swat Valley region in the northwest, Reuters reported, as critics warn that Pakistan effectively is ceding the region to the Islamist group.

Taliban commander Maulana Fazlullah met with his father-in-law Maulana Sufi Mohammad, a radical cleric who was freed by the government to broker a peace agreement.

"They have made a commitment that they will observe a permanent cease-fire and we'll do the same," Syed Mohammad Javed, the commissioner of Malakand, said in a Reuters report. Malakand is a region of Northwest Frontier Province.

The deal allows for the imposition of Islamic law in the former tourist resort of Swat and surrounding districts in exchange for an end to a brutal insurgency that has killed hundreds and sent up to one third of the area's 1.5 million people fleeing.

Critics say the deal effectively cedes Swat to the Taliban and could embolden other militant groups challenging Pakistan's shaky secular government. But Pakistani officials say the deal is no concession, arguing that it addresses long-standing demands for a more efficient justice system in Swat and surrounding areas.

A similar deal in Swat last year collapsed in a few months and was blamed for giving insurgents time to regroup.

Reuters and The Associated Press contributed to this report.