Pakistan's security forces on Tuesday launched a major operation to rescue hostages taken by the Taliban militants in the restive Khyber Pakhtunkhwa province after talks between the government and the militants failed to resolve the standoff.

The standoff began on Sunday when an arrested TTP militant, who was being interrogated at the Counter-Terrorism Department (CTD) police station inside the Bannu Cantonment, snatched an AK-47 from the police and opened fire.

He then freed other wanted militants being held at the building and together they took control of the compound.

They also took several policemen as hostages.

The TTP remains steadfast with the demand of wanting a safe passage of its prisoners either to Afghanistan.

Pakistan's security officials embarked on a major operation to rescue hostages from Bannu CTD Police Station compound, media reports said.

Footage aired on TV on Tuesday showed plumes of smoke rising in the air from the CTD compound, according to the Dawn newspaper.

It was not immediately clear what had happened to the hostages or the Taliban militants.

The operation was launched even as no breakthrough was achieved in talks between Pakistan's federal government and the Taliban militants for the second day.

The situation in Bannu remained tense on Tuesday as police and security agencies have cordoned off the CTD compound from all directions and asked residents to remain indoors.

As the deadlock continued, a security alert was issued and all schools and colleges in Bannu district remained closed.

Mobile services in cantonment area and the surrounding areas were also suspended, officials said.

A TTP spokesman, Muhammad Khurasani, said on Monday that they took this step after reports of inhuman attitudes of the security officers with their prisoners in the CTD police station.

The TTP, set up as an umbrella group of several militant outfits in 2007, last month called off a ceasefire agreed upon with the federal government in June and ordered its militants to stage terrorist attacks across the country.

Meanwhile, at least 50 militants stormed into a police station around 1 am on Tuesday in Wana, situated in the tribal district of South Waziristan, injuring a police constable.

"More than 50 militants stormed into the police station and opened fire, injuring a constable. They took away ammunition, weapons and other equipment," the district's chief police officer said.

One militant was killed in the retaliatory fire.

The rest have managed to flee, police said.

A search operation is currently underway to nab the culprits, police added.