ISLAMABAD, (Reuters) – Pakistan will defeat the Taliban militarily but could lose the public relations war if it fails to help the hundreds of thousands of people displaced by the fighting, Prime Minister Yusuf Raza Gilani said on Thursday.

The army launched an offensive in the Swat valley, northwest of Islamabad, last week after the United States accused the government of “abdicating” to the militants.

About 700,000 people have fled from their homes, joining more than 500,000 displaced by earlier fighting in the northwest. The United Nations has warned of a long-term humanitarian crisis.

“Militarily we will win the war but it will be unfortunate if we loose it publicly,” Gilani told the National Assembly.

Most political parties and members of the public support the offensive, despite widespread doubts about a close alliance with the United States in its campaign against militancy. But opposition will grow if many civilians are killed in the fighting or if the displaced are seen to be enduring undue hardship.

The offensive was launched when President Asif Ali Zardari was in Washington assuring the United States his government was not about to collapse and was committed to fighting militancy.

Pakistani action against militants in its northwest is vital for U.S. efforts to defeat al Qaeda and stabilise neighbouring Afghanistan.

About 15,000 members of the security forces are facing about 5,000 militants in the Swat region, the military says.

Soldiers are battling militants in their stronghold in the Peochar valley, a side valley running northwest off the main Swat valley, apparently to block a major escape route.

Taliban are still holding the region’s main town, Mingora, where many civilians have been sheltering in their homes since the government imposed a curfew.

Residents began fleeing late last month when the army attacked the Taliban in two districts near Swat they had occupied in violation of a February peace pact aimed at ending violence in the former tourist valley.

Gilani said the internal displacement was unprecedented in the country’s history and the government had to win the hearts and minds of those forced from their homes.

The U.N. refugee agency said only about 80,000 of the displaced were staying in camps, with the rest staying with friends, relatives, or in rented accommodation or in “spontaneous settlements” that were springing up.

Pakistan has experience of dealing with large numbers of homeless in cooperation with aid agencies.

About 3.5 million people lost their homes in an October 2005 earthquake in northern mountains and the army led a successful effort to feed and shelter the victims through a harsh winter.

A senior army officer who played a major role in the 2005 relief effort is overseeing the operation to help the people fleeing Swat.

Gilani said the government planned to hold a conference of aid donors to raise funds but Gilani said he also expected the Pakistani people to help.

“The people of Pakistan have the same passion and love for these displaced people that they displayed during the 2005 earthquake,” he said.

The military says more than 760 militants and 34 soldiers have been killed in the fighting. Reporters have left Swat and there was no independent confirmation of that estimate of militant casualties. A Taliban spokesman said on Wednesday only seven of his men had been killed.

The military said this week there have been no reports of civilian casualties in its actions as soldiers were targeting militants in hideouts in mountains and urban warfare had not started.