The operation named Khyber-1 was launched by military to clear the region's Bara area of militants.
All roads leading to the area have been closed to stop the militants fleeing the area, said an official.
The operation is currently focused in Akakhel, Sepah and Malikdinkhel areas of Bara, where hitherto 11 militants have been killed and 10 others injured. Several militant hideouts have been targeted during the operation.
The operation was launched following reports that militants were using the area as a base to hide and launch successive strikes in the Tirah valley of the district, said another official.
In the first phase of offensive, the forces have planned to clear the areas from Bara to Tirah and then move deeper into the valley.
Khyber's Bara region is strategic due to its proximity to the provincial capital Peshawar.
It is also the major region connecting Afghanistan and Pakistan through which the bulk of NATO supply and Afghan transit traffic passes.
Curfew has been imposed in the area and people are not allowed to either enter or leave Bara. There were reports that hundreds of families have fled the area and more were trying to escape.
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