"Eight terrorists were killed and 18 captured alive," spokesman Major General Shaukat Sultan told AFP, revising the original toll of 12.

"The operation culminated late in (Thursday) evening."

Two Pakistani troops were killed and two wounded in the day-long gunfight, which began at 5:30 am (0030 GMT) when commandoes besieged a suspected al-Qaeda hideout in mud-walled tribal homes five km from the border in Angoor Adda in South Waziristan tribal district.

The heavily-armed fighters had been observed by Pakistani authorities crossing back and forth from Afghanistan's Paktika province near the Taliban-controlled district of Barmal and the Afghan border town of Shkin.

They were believed to have been involved in attacks on US troops which left one US soldier dead on Monday, army officers said.

The operation was launched just days after US Deputy Secretary of State Richard Armitage criticised Pakistani security forces' commitment to hunting al-Qaeda and Taliban remants, saying: "I do not think that that affection for working with us extends up and down the rank-and-file of the Pakistani security community."

Armitage was due to land in Islamabad late Thursday for talks with President Pervez Musharraf but at the last minute postponed his visit until Saturday citing illness.

Armitage has said he plans to raise with Musharraf the growing problem of Taliban and al-Qaeda insurgents regrouping in Pakistan and infiltrating back into Afghanistan.