International alarm at the Talibanisation of parts of northern Pakistan near Islamabad was mounting last night after militants ambushed a convoy of soldiers deployed to prevent extremists taking over a district only 60 miles from the capital.

Snipers opened fire on police escorting four platoons of Frontier Corps paramilitary troops into Buner district, a day after militants overran government buildings and looted western aid offices. One policeman was killed and one injured, an army spokesman said.

Locals said the ambush had forced the Frontier Corps to retreat. "Now Buner is ruled by the Taliban," one resident told the Guardian by phone. "They go anywhere they want."

The confrontation comes just a week after the government introduced sharia law in neighbouring Swat, in an effort to appease the Taliban. But the deal has only emboldened a spread into other districts, in the name of spreading Islamic law.

Two weeks ago the Taliban occupied a Sufi shrine in Buner, accusing locals of using it for "un-Islamic" practices. On Wednesday they swept through the main town, Daggar. Gun-toting militants looted aid agency offices, stole western-funded vehicles and forced police to retreat into their stations.

After talks with district officials, Taliban commanders promised to keep their fighters off the streets yesterday. But they continued with FM radio broadcasts emphasising Islamic teachings and warning men not to shave their beards. "We are here preaching for sharia. We don't want to fight," a commander named Khalil told the AP.

The fall of Buner does not pose an immediate threat to Islamabad. The capital lies across a mountain range and the river Indus. But the speed and aggression of the latest advance has stoked a sense of panic among Pakistan's western allies, and, increasingly, at home.

On Wednesday the US secretary of state, Hilary Clinton, accused President Asif Ali Zardari's government of "basically abdicating to the Taliban and the extremists". After an outcry from Pakistani officials, she modified her tone yesterday, conceding there was an "increasing awareness" of the threat within government circles.

Sam Zarifi of Amnesty International said the government had left the 650,000 residents of Buner, particularly women and children, "at the mercy" of the Taliban.

The army spokesman, General Athar Abbas, said that western fears were "overblown" and called for patience in dealing with the militants. Taliban violence was swinging divided public opinion against the militants, he said. "We are giving them enough rope to hang themselves."

Certainly a new sense of urgency is gripping Pakistan's political class, where it has been fashionable to call the fight against the Taliban "America's war".

The opposition leader, Nawaz Sharif, urged the government to contain the militants within Swat.

A more surprising statement came from Maulana Fazlur Rahman, the leader of the pro-Taliban Jamiat Ulema-e-Islam party, who warned the national assembly on Wednesday: "If Taliban continue to move at this pace they will soon be knocking at the doors of Islamabad."

But there is little sense yet of a concerted effort to push back the militants, who have exposed the fragility of the federation and resurrected fears that the country is heading towards break-up.

The Buner assault is likely to strain the controversial Swat peace accord. In exchange for peace, the provincial government, headed by the secular Awami National party, agreed in February to introduce sharia law in Swat and seven adjoining districts known as Malakand Division - an area of about 10,000 square miles that accounts for one third of the North West Frontier province.

But since the deal, the Taliban have established control over much more than the judicial system.

In Mingora, the valley's commercial hub, police have been reduced to directing traffic and secular politicians have fled, many under death threats.

At the nearby Taliban headquarters in Imam Dehri, a Taliban spokesman, Muslim Khan, told the Guardian that their goal was the establishment of an Islamic caliphate - first in Pakistan, then across the Muslim world.

"Democracy is a system for European countries. It is not for Muslims," he said. "This is not just about justice. It should be in education, health, economics. Everything should be under sharia."

If the Swat deal collapses the army is likely to reactivate up to 15,000 security forces currently posted to the valley. Tensions are starting to show.

Earlier this week the Taliban kidnapped four soldiers. Gen Abbas said negotiations were under way for their release.