A religious student takes a drink during a clash outside the Lal mosque in Islamabad, Pakistan, 04 July 2007

Power to the mosque was cut off Tuesday night, and Pakistani troops used armored vehicles and barbed wire to seal of the neighborhood.

More than a hundred mostly female students surrendered Wednesday after the government ordered the militants to lay down their arms or face further attacks.

Hundreds more remain inside, however, and mediators continue to push for a peaceful settlement.

Information Minister Tariq Azim says the government hopes to avoid an all-out confrontation.

"We still hope that common sense will prevail and that they will surrender, realizing that they have no other option left to them now," he said.

Clashes at the mosque on Tuesday left at least 11 people dead and much of the city under virtual martial law.

Tuesday's clashes erupted after students, many armed with bamboo clubs and handguns, rushed toward a government security post.

Officials say the police were firing tear gas into the crowd when several students opened fire, killing at least one officer.

Witnesses say the mosque also broadcast calls for suicide bomb attacks over its loudspeakers.

The bloody confrontation follows a standoff over the past several months between the mosque's pro-Taleban supporters and the Pakistani government.

Lal Masjid's leaders want to impose strict Islamic law, like that implemented by the Taleban government in Afghanistan a decade ago.

Its students have led a series of provocative raids into the city, including several kidnappings of local police and a number of alleged prostitutes.

The government has repeatedly threatened to retaliate but until Tuesday it always backed down in favor of negotiated settlements.

The conflict comes as Pakistan President Pervez Musharraf faces mounting political opposition ahead of elections expected later this year.

Many of his critics used the Lal Masjid standoff to highlight concerns that the government has failed to control religious extremists.