Hundreds of soldiers and police sealed off the mosque and imposed an indefinite curfew after Tuesday's bloodshed, as the government extended a deadline for students to lay down arms.

The violence erupted after a months-long stand-off between the authorities and a Taliban-style movement based at Lal Masjid, or Red Mosque, less than a couple of kilometers from parliament and Islamabad's protected diplomatic enclave.

Soldiers moved 12 armoured personnel carriers, mounted with machineguns into the area as gunfire subsided overnight.

Growing numbers of students took up an offer of safe passage and 5,000 rupees ($85) and left the mosque as a deadline for students to surrender passed at 1 p.m.

The government has said women and children can go free, but top mosque leaders and males involved in killings and other crimes will face prosecution.

Officials say about 5,000 students remain inside the mosque compound. It is not clear how large the hard core of radicals is.