By Hafiz Wazir

WANA, Pakistan, June 24 (Reuters) - U.S. drones prowled the sky over Pakistan's South Waziristan on Wednesday, a day after one of the aircraft attacked a stronghold of Pakistani Taliban leader Baitullah Mehsud, killing about 70 militants.

The U.S. attack came as the Pakistani army is preparing an all-out assault on al Qaeda ally Mehsud, who has been accused of orchestrating a campaign of bombings in Pakistan, including the 2007 assassination of former prime minister Benazir Bhutto.

The push into South Waziristan on the Afghan border looms as the army is finishing off an offensive in the Swat valley, northwest of Islamabad, launched after Taliban gains raised fears for nuclear-armed Pakistan's future.

Pakistan is a vital ally for the United States as it strives to defeat al Qaeda and stabilise Afghanistan, where thousands of extra U.S. soldiers are arriving.

The pilotless U.S. drone strike late on Tuesday, on a funeral for one of six militants killed in a similar strike earlier in the day, suggests closer coordination between the United States and Pakistan.

But Pakistan, which officially objects to such strikes, is unlikely to confirm that in a country where many people are suspicious of the alliance with the United States in its global campaign against militancy. (For a factbox on U.S. drone strikes, click on [ID:nISL468987])

Intelligence officials said late on Tuesday 45 people had been killed in the drone attack as mourners were leaving the funeral. On Wednesday they said about 70 people had been killed. A Taliban spokesman said 65 had been killed.

A Taliban official said Mehsud had been in the area but was not hurt. Security officials and villagers said the Taliban had sealed off the site.

"Bodies are still lying there and the Taliban are not allowing anybody close while their men are coming and going in vehicles," resident Ghulam Rasool told Reuters by telephone.

The militants also fired at U.S. drones flying over the remote, mountainous region.

"Militants fired with machineguns at two drones in Makeen and Laddah, forcing them to fly back," said another resident, referring to two areas under Mehsud's control.

TALIBAN CLAIM KILLING RIVAL

The military has been launching air strikes on Mehsud's bases over the past week or more while soldiers have been securing main roads into the region, sealing off his stronghold.

A military convoy, including tanks and armoured personnel carriers, headed towards the area on Wednesday, a Reuters reporter in the region said.

Tuesday's drone attacks happened hours after a gunman working as a guard killed a rival of Mehsud who had spoken out strongly against the Taliban chief.

On Wednesday, Taliban spokesman Wali-ur-Rehman said the Islamist group had claimed responsibility for killing the rival militant commander, Qari Zainuddin.

The killing of Zainuddin, in the North West Frontier town of Dera Ismail Khan, showed Mehsud's reach and would be a setback for government efforts to win over ethnic Pashtun tribal factions for the campaign against Mehsud, analysts said.

Nearly 1,600 militants and more than 100 soldiers have been killed in the Swat offensive, according to the military. There has been no independent confirmation of those casualty figures.

The imminent army operation in South Waziristan has forced about 45,000 people to flee the region and join about two million people uprooted by fighting in Swat and other areas.

The offensive against the Taliban has widespread support among politicians and the public but a fragile civilian government could see that backing evaporate if the displaced are seen to be suffering unduly. (Additional reporting by Alamgir Bitani; Writing by Augustine Anthony; Editing by Robert Birsel and Paul Tait) (For full coverage on Afghanistan and Pakistan, click on [ID:nSP102615]) ((augustine.anthony@thomsonreuters.com; +92-51-281-0017; Reuters Messaging; augustine.anthony.reuters.com@reuters.net))

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