(Updates death toll, witness account)

ISLAMABAD, Oct 7 (Reuters) - Pakistani soldiers backed by helicopter gunships and jets killed 65 pro-Taliban militants but lost 20 of their own men in fierce fighting in a tribal area on the Afghan border, officials and witnesses said on Sunday.

The fighting began when militants ambushed a military convoy near Mir Ali town in North Waziristan on Saturday night.

Casualties mounted as the army struck back and fresh clashes broke out in other areas close to Mir Ali, known as an al Qaeda haunt, and the fighting continued into Sunday evening, military spokesman Major-General Waheed Arshad said.

He said fighter jets were also used in the operation.

"Helicopter gunships and jets are pounding the area. I could see huge flames of fire rising from the area," a resident of Mir Ali told Reuters.

Pakistan has seen a wave of violence since July, when a peace pact with militants broke down in North Waziristan and army commandos stormed a radical mosque in the capital, Islamabad.

The violence has reinforced opposition among many Pakistanis to President Pervez Musharraf's support for the U.S.-led war on terrorism.

Musharraf, who won most votes in a presidential election on Saturday, has said terrorism and extremism are the biggest challenges the country faces and has called for reconciliation among political parties to tackle it.

Residents had said earlier they had seen a military build-up, apparently in preparation for an offensive against the al Qaeda-linked militants.

Waziristan is a hotbed of support for Taliban and al Qaeda militants, who fled to the region after U.S.-led forces drove them out of Afghanistan in late 2001.

Militants in neighbouring South Waziristan are still holding about 225 soldiers captured at the end of August.

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