Pakistani forces attacked Taliban militants in the Swat valley on Friday as tens of thousands of civilians continued to pour out of the area.
The UN refugee agency said a "massive displacement" was underway.
Citing provincial government estimates, it said up to 200,000 people had left their homes over recent days with another 300,000 on the move or about to move.
They are joining another 555,000 people displaced in other areas because of fighting since August, it said.
The struggle in the scenic northwestern valley 130 km from Islamabad has become a test of Pakistan's resolve to fight a growing Taliban insurgency.
The military said 143 militants had been killed in the Islamist bastion of Swat over the past 24 hours. There was no independent confirmation. Seven soldiers had been killed, an army spokesman said.
Military spokesman Major-General Athar Abbas said the army was engaged in a "full-scale operation to eliminate the militants."
Earlier, helicopter gunships and fighters attacked Taliban positions. There were 4,000 to 5,000 militants in the valley while up to 15,000 members of the security forces were involved, Major-General Abbas said.
