A spokesman for the UN High Commissioner for Refugees says the fighting between Pakistani security forces and the Taliban has led to massive displacement in the area.
At least half a million people have fled fighting in Swat Valley, where a peace deal broke down earlier this week, bringing the total displaced in recent months to 1 million.
A UNHCR spokesman said that up to 200,000 people have arrived in safe areas in the past few days. Another 300,000 are on the move or are about to flee.
Military operations are taking place in three neighbouring districts, Swat, Dir and Buner, which stretch over some 400 square miles.
Pakistani aircraft continued to bomb Taliban positions in the militants' bastion in Swat valley bastion today, a day after the prime minister ordered the military to "eliminate terrorists".
President Asif Ali Zardari, in Washington for talks aimed at quelling the chronic unrest that has alarmed the United States, vowed military operations would last until "normalcy" had returned to Swat.
Authorities agreed in February to a Taliban demand for the introduction of Islamic sharia law in the valley but the militants refused to disarm, and pushed out of Swat closer to the capital.
Helicopter gunships, fighters and troops were all involved in operations in Swat, and up to 12 militants were killed after as many as 55 were killed the previous day, said Major Nasir Khan, a military spokesman in Swat.
Salman Khan, speaking from Saidu Sharif, neighbouring Swat's capital, Mingora, said two children were killed and five others wounded when two mortar shells hit a house in his neighbourhood.
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Tens of thousands of civilians have fled the fighting this week. The International Committee of the Red Cross said a humanitarian crisis was intensifying.
Desperate Swat residents appealed for a pause in the fighting so they could escape, saying the Taliban were not allowing them to leave, perhaps because they want to use them as "human shields" and make the army unwilling to use force.
"We want to leave the city, but we cannot go out because of the fighting," said one resident, Hidayat Ullah. "We will be killed, our children will be killed, our women will be killed and these Taliban will escape."
"Kill terrorists, but don't harm us," he pleaded.
Although many Pakistanis have had doubts about the need to fight the militants, the mood among at least some seemed to be shifting.
"If the government is serious in eliminating militants from Swat then we will support the military operation," said Khalid Khan, a social worker and resident of the Dheri Baba area in Swat.
However Pakistani forces came under intense fire from militants, mostly young men who are highly motivated ideologically and frequently better paid than soldiers.
A teacher joining the streams of refugees fleeing Mingora said it was completely under Taliban control.