US Secretary of State Hillary Clinton has told a congressional panel that the situation in Pakistan poses a "mortal threat" to world security.

Clinton accused Pakistan of abdicating to the Taleban by allowing them to control parts of the country. She said extremists were being allowed to control territory such as the Swat Valley, in north-western Pakistan.

She also called Pakistan's judicial system corrupt, adding that it has only limited power in the countryside, the BBC reported.

Earlier this month, Pakistani President Ali Zardari signed a law implementing Islamic law, or Sharia, in the Swat Valley region as part of a deal to end a two-year Taleban insurgency there.

Once one of Pakistan's most popular holiday destinations, the Swat Valley is now mostly under Taleban control.

Thousands of people have fled and hundreds of schools have been destroyed as a result of a Taleban-led insurgency.

The Swat Valley is only about 100km from Islamabad, and reports suggest the Taleban are trying to expand the area under their control.

US President Barack Obama has put new emphasis on trying to resolve the security problems in Pakistan, our correspondent says, offering billions of dollars in aid but demanding greater co-operation from the government.

Using stark language, Clinton said the situation in Pakistan needed urgent attention.

During her hearing Mrs Clinton also answered questions on Cuba and Iran, warning that Tehran faces "very tough sanctions" if it rejects offers of engagement over its nuclear programme.

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