Islamabad  - Pakistani Prime Minister Yousuf Raza Gilani Friday called for a change in the national mindset to counter terrorism and extremism, as the country marked its 63rd Independence Day.

"We think the enduring solution to terrorism is to continue with the efforts to change the thinking of the people [towards elements who are exploiting the religion of Islam]," Gilani said.

Security forces have been battling a Taliban insurgency in Swat valley and its neighbouring districts for over three months.

"The military operation in Swat and Malakand [region] reflects the unwavering commitment and firm resolve of this great nation to weed out all those aberrations that pose a threat to the democratic destiny of 170 million Pakistanis," Gilani said.

Troops are also up for an offensive against the network of Taliban chief Baitullah Mehsud, who was believed killed in a US strike in the South Waziristan tribal district last week.

He said the Armed Forces were striving for lasting peace and an environment "where rule of law is the law, instead of terrorists dictating their terms."

More than 1,700 militants have been killed in the Swat onslaught, which was launched after supporters of local radical cleric Maulana Fazlullah violated a peace pact and expanded their influence to areas less than 100 kilometers from the capital Islamabad.

Authorities are now focusing on resettling nearly 2 million people who fled the violence in Swat but have now started to return to areas held by the military.

Security forces were placed on alert amid fears of Taliban retaliation in the wake of Mehsud's apparent death and military operations in the volatile north-western region.

Pakistan's dwindling economy and worsening energy deficit also featured in Gilani's speech. But the premier blamed the crisis on the government of former president Pervez Musharraf, who was forced out last August, six months after his political supporters were trounced in a national vote.

Gilani also stressed the importance of good relations with arch-rival India for peace and stability in South Asia.

"Following the principles of equality and non-interference, the two countries can play the role of ideal neighbours," he said.

India and Pakistan have fought three wars, two over the disputed Himalayan region of Kashmir, since their birth in 1947. Ties have been strained since last year's Mumbai attacks, which were blamed on terrorist organizations based in Pakistan.

Gilani hoped recent meetings between Indian Prime Minister Manmohan Singh and Pakistan's leadership would create a thaw.

Independence Day celebrations began with a 31-gun salute in Islamabad and 21-gun salutes in the four provincial capitals. Special prayers were offered in mosques for the stability and prosperity of the lone nuclear-armed Muslim country.

Ceremonial changes of guards at the mausoleums of Pakistan's founder Mohammad Ali Jinnah and national poet Allama Mohammad Iqbal, flag-hoisting ceremonies and state functions were held across the country.

People in Swat began celebrating on the stroke of midnight, with crowds moving through the streets in Mingora, the main town of the former tourist resort. (dpa)