Sher Ahmed Khan, a Pakistani subsistence farmer and day labourer, is 35, but his red-rimmed eyes and thinning hair make him look older. When he relates what happened to his family on 28 April this year, you begin to understand why he seems weighed down by care. "We knew the army was about to attack the Taliban, but we didn't understand what that would mean," he said. "I was working when the operation started, and people escaping the fighting told me my house had been hit. I found my four-year-old son Bilal dead. My wife and the other four children were wounded. The house was destroyed, and everything was soaked in blood." A rocket-propelled grenade fired by the Taliban at a military helicopter had missed its target.

After two months in a camp, the family returned to their village in Buner district, but their lives remain shattered. "We are all living in one room, I don't have the money to rebuild any more of the house," said Sher Ahmed. "I used to sell milk from our cow and hire out my horse and cart, but my animals were also killed. Now and then I can earn about 250 rupees [less than £2] a day unloading goods in the market."

To most people in the West, the battle against al-Qa'ida and its allies seems remote. But Sher Ahmed Khan and his family are among millions of ordinary Pakistanis to whom the struggle has meant death or terror, as well as the loss of homes and livelihoods. While Britain and America applaud Pakistan's President Asif Ali Zardari for finally cracking down on creeping extremism within his country's borders, many innocent civilians are caught in the middle.

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This year's Christmas appeal by The Independent on Sunday is in support of the work of ActionAid in Buner and Swat, two districts in north-west Pakistan that were engulfed in this year's fighting which drove nearly two million people from their homes. Though most have since returned, they often found their houses looted or in ruins. Farmers have lost their crops and livestock, hundreds of schools and clinics have been bombed or trashed, and official food handouts are reaching only a fraction of the population. A cash-strapped Pakistani government has promised 25,000 rupees (about £180) in compensation to each family, but Sher Ahmed has yet to see it.

Nor can the situation in Buner and Swat be called stable, even now. Pockets of militants remain in the mountains, and in many areas people hear shooting at night. The army maintains a 6pm to 6am curfew in Buner, hampering the work of farmers. They have also been forbidden to plant maize, a staple crop in the region, because the military says the tall stalks could hide Taliban infiltrators.

Above all, there is still pervasive fear. Particularly in the Swat valley, which suffered for years from the ambivalent attitude of the previous military government towards the Taliban – vacillating between half-hearted attacks and attempts to buy them off – people are terrified that the militants could come back, so they measure their words with extreme caution. "The scales are in favour of one side now, but who knows what will happen in the future?" asked one man in Mingora, the capital of Swat.

Zohra Bibi, 49, a widow in Buner, was one person unafraid to speak out. "My husband and I were very much against the Taliban, because they have destroyed the peace of our land," she told me. "He hated them so much that you couldn't mention the Taliban in front of him." A bitter irony, then, to learn that Bakht Karim Shah, a 52-year-old secondary school principal, was killed not by the extremists, but by the army.

"Karim was acting as an external examiner at another school, and was driving home, completely unaware that the soldiers had declared a curfew," said Zohra, who has been left with 10 children, the youngest aged three. "When he passed a checkpoint without stopping, an armoured vehicle opened fire on the car. He bled to death on the spot, because no one was allowed to give him first aid."

The army had never apologised. "They said it was a difficult time, he had violated the curfew, and for all they knew, he could have been a terrorist," Zohra added.

A week earlier in a village a few miles away, 44-year-old Tajori's husband was killed by the Taliban. Gul Saeed, 49, was one of six policemen shot by the extremists to terrorise the population of Buner. "He told us that the Taliban might come, but never spoke of his own fears," said Tajori. Their eldest son Iqrar, 23, added: "I begged him not to go to work that day, but he said he had to do his duty."

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The army operation of April and May halted a nightmare process lasting several years, in which the extremists extended their influence from the mountains of northern Swat into the plain, and southwards into Buner, only a couple of hours by road from the capital, Islamabad. Many people I spoke to said that initially they sympathised with the Pakistani wing of the Taliban against the unpopular, unelected government of Pervez Musharraf. "It was only this year that we saw the Taliban's true nature," said one.

The catalyst for that was a disastrous attempt by President Zardari to compromise with the militants, who were allowed to introduce their version of Islamic law (sharia) in the Swat and Buner valleys in return for an agreement to disarm, which was never honoured. Instead women were forced into the burqa, girls' schools were bombed along with music and video shops, and barbers who continued giving their customers shaves and haircuts – Islamist zealots insist on untrimmed beards and hair – had their throats cut and their bodies strung up.

In the spring, the government lost patience and launched an all-out military assault, preceded by heavy airstrikes and artillery barrages. As an elected administration it could claim popular support, but the operation killed scores of civilians and caused 90 per cent of the population of Buner and Swat to escape to camps and relatives' homes in other parts of Pakistan. Now they are back, they face a harsh winter with scarce resources.

People here know all too well what lies ahead in South Waziristan, where some 350,000 civilians have fled the latest offensive, and where ActionAid is also preparing to help. With the international spotlight having moved away from Buner and Swat, however, there is a danger that the ordeal of its inhabitants will pass unnoticed. A fertile region, once prosperous by Pakistani standards, with a thriving tourist and honeymoon trade founded on Swat's mountainous scenery, has been left devastated. Zohra Bibi did not learn her husband was dead until half an hour before he was buried, such was the haste of her entire village to flee the fighting. "I have never recovered," she said. "As I looked at his body I wondered,'What is the future for my children?'" The family is grateful to ActionAid and its local partners, which have given them a cow. "Even if the younger children have nothing to eat, they at least have milk," said their mother.

With your support, Actionaid can send help to many more victims of the conflict, such as Sher Ahmed Khan. He said: "We are still in shock. At night I cannot help but think about what happened to the family, and the son we lost. Whenever the other children hear a helicopter, they are terrified. They will remember this all their lives."

What your money buys

The Independent on Sunday's Christmas appeal is for the work of ActionAid in Pakistan, where millions of innocent civilians have lost their homes and livelihoods in the battle against al-Qa'ida and its allies. Your donations to ActionAid, which has been working in the country since 1992, will help these people rebuild their lives.

£10 buys 10kg of rice to feed displaced people.

£25 provides a kitchen kit, including plates, bowls, spoons, and utensils.

£50 helps provide a cow to a woman-headed household.

£100 trains a teacher to counsel the many children traumatised by the conflict.

Donate now at: www.actionaid.org.uk/ios