The CIA is equipping Pakistani tribesmen with secret electronic transmitters to help target and kill al-Qaida leaders in the north-western tribal belt, in a tactic that could aid Pakistan's army as it takes the battle against extremism to the Taliban heartland.

As the army mops up Taliban resistance in the Swat valley, where a defence official predicted fighting would be over within days, the focus is shifting to Waziristan and the Taliban warlord Baitullah Mehsud.

But a deadly war of wits is already under way in the region, where tribesmen say the US is using advanced technology and old-fashioned cash to target the enemy.

Over the last 18 months the US has launched more than 50 drone attacks, mostly in south and north Waziristan. US officials claim nine of the top 20 al-Qaida figures have been killed.

That success is reportedly in part thanks to the mysterious electronic devices, dubbed "chips" or "pathrai" (the Pashto word for a metal device), which have become a source of fear, intrigue and fascination.

"Everyone is talking about it," said Taj Muhammad Wazir, a student from south Waziristan. "People are scared that if a pathrai comes into your house, a drone will attack it."

According to residents and Taliban propaganda, the CIA pays tribesmen to plant the electronic devices near farmhouses sheltering al-Qaida and Taliban commanders.

Hours or days later, a drone, guided by the signal from the chip, destroys the building with a salvo of missiles. "There are body parts everywhere," said Wazir, who witnessed the aftermath of a strike.

Until now the drone strikes were the only threat to militants in Waziristan, where the Pakistani army had, in effect, abandoned the fight.

But now, emboldened by a successful campaign to drive militants out of Swat, a region about 80 miles from Islamabad, the army is preparing to regain lost ground in the more remote tribal belt.

It will be a much tougher campaign than in Swat, with the army pitched against a formidable, battle-hardened opponent. Yesterday Taliban fighters ambushed a military position in what could be a prelude to much more intense combat.

For the US military, drones have proved to be an effective weapon against al-Qaida targets, and they are becoming increasingly accurate.

On 1 January a drone-fired missile killed Usama al-Kimi, a Kenyan militant who orchestrated last year's Marriott hotel bombing in Islamabad, a senior official with Pakistan's ISI spy agency said.

It is a high-tech assassination operation for one of the world's most remote areas.

The pilotless aircraft, Predators or more sophisticated Reapers, take off from a base in Baluchistan province.

But they are guided by a joystick-wielding operator half a world away, at a US air force base 35 miles north of Las Vegas [See footnote].

Barack Obama has approved the drone campaign, which is cheap and limits the danger posed to US troops. But the strikes have many unintended victims. A Pakistani newspaper estimated that 700 people had been killed since 2006, most of them civilians, as a result of drone attacks.

For the tribesmen who plant the microchips and get it wrong, the consequences can be terrible. Last month the Taliban issued a video confession by Habib ur Rehman, 19. "They money was good," he said in a quavering voice, describing how he was paid 20,000 rupees (£166) to drop microchips hidden in a cigarette wrapper at the home of a target.

Rehman said his handler promised thousands of pounds if the strike was successful, and protection if he was caught. The end of the video showed Rehman being shot dead with three other alleged spies. Residents say such executions – there have been at least 100 – indicate how much the drone strikes have worried the Taliban.

In Wana, the capital of south Waziristan, foreign fighters are shunning the bazaars and shops, and locals are shunning the fighters. "Before, the common people used to sit with the militants," said Wazir. "Now they are also afraid.

Paranoid militant commanders are closely monitoring cross-border traffic with Afghanistan, from where they suspect the chip-carrying CIA spies are coming, said Imtiaz Wazir, a resident of Spin Wam village in north Waziristan. "If I go to Afghanistan without any purpose, the militants come to ask why," he said.

A local transporter named Haji Hamid who gave the wrong answer, he said, was found shot dead two months ago, his legs and fingers broken.

The drone strikes are despised across Pakistan, where politicians including President Asif Ali Zardari denounce them as a breach of sovereignty. But behind the scenes his government is quietly colluding with Washington.

A former CIA officer who served in Waziristan in 2006 said that small American teams comprising CIA agents, radio experts and special forces soldiers are stationed inside Pakistani military bases across the tribal belt.

From there, the CIA recruits a network of paid, and sometimes unwitting, informers – known as "cut-outs" – to help identify targets, he added. In most cases they are poor local men.

Ironically, support for the drone strikes is strongest in the frontier, especially among embattled security officials. "They are very precise, very effective, and the Taliban and al-Qaida dread them," said the provincial police chief, Malik Naveed Khan, with undisguised admiration. The strikes have caused friction between the US and the ISI, which would like America to give it control over the new technology. "The problem with the Americans is that the only instrument up their sleeve is the hammer, and they see everything as a nail," said a senior official.

The ISI resents the US for failing to target Mehsud, whose deputy claimed for last week's Lahore attack that killed at least 24 people, including an ISI colonel.

But as the army prepares to attack South Waziristan, with broad public support, the warlord's luck may be running out. Authorities in North West Frontier Province are preparing for up to 500,000 refugees, added to 2.5 million displaced by operations in Swat.

Mehsud faces other challenges, too. Rival militant groups, with army support, are challenging his dominance in South Waziristan.

And he faces the ever-present danger that some visitor could drop a "pathrai" at his doorstep, and bring an American drone with it.

• This footnote was added 6 November 2009. Since this story was published in May, it has emerged that the drone programme run from Creech air force base in Nevada is not the only such US system. A second programme, run by the CIA from a site near its Virginia headquarters, is the one that strikes in Pakistan's tribal areas.

• This article was amended on Monday 1 June 2009. Due to editing errors the original located the tribal belt in the east, and a drone reference appeared contradictory. This has been corrected.