* More than 10,000 flee to neighbouring Afghanistan
* Ground offensive expected to start any day
* North Waziristan is home to al Qaeda-linked insurgents
* Tens of thousands flee into nearby region of Bannu (Adds Taliban statement)
By Jibran Ahmed
BAKA KHEL, Pakistan, June 19 (Reuters) - Their belongings piled high on buses, rickety donkey carts and tractors, thousands of refugees poured out of Pakistan's North Waziristan on Thursday, terrified by both state troops and Taliban insurgents fighting for control of the troubled region.
Pakistan announced the start of a full-on military offensive on Sunday to quash an increasingly assertive Pakistani Taliban insurgency in the ethnic Pashtun region, the base of some of the country's most feared al Qaeda-linked militants.
Troops have since encircled the mountainous region on the Afghan border and fighter jets have pounded villages and militant hideouts, sending a wave of panicked people spilling into the nearby region of Bannu, as well as Afghanistan.
For tens of thousands of people massing in camps and private homes in Bannu, living under army control was as frightening a prospect as living in the Taliban's shadow.
"Waziristan was our paradise but the Taliban and security forces turned it into a hell," said Khair Mohammad, 48, a farmer who brought 20 members of his extended family to Bannu in a wagon pulled by a tractor.
"I didn't want to leave but my children developed serious mental problems because of the bombings by fighter jets and heavy artillery shelling by security forces."
The Pakistani Taliban are deeply entrenched in the complex tribal patchwork of North Waziristan's society, blending into the populace and hard to distinguish from ordinary residents.
Prime Minister Nawaz Sharif and his government have tried to engage those they see as moderate Taliban in ceasefire talks but those efforts collapsed after a Taliban attack this month on Pakistan's biggest airport in Karachi.
In response to the army operation, the Taliban commander for North Waziristan, who had entered a peace deal with the government in 2006, announced his forces would launch a counter-offensive on Friday.
"It is a war of defence," a spokesman for Commander Hafiz Gul Bahadur, Ahmedullah Ahamdi, told Reuters.
He said the Taliban offensive had been dubbed Zarb-e-Momin, or "Strike of the True Muslim" - a clear jibe at the name of the army operation, Zarb-e-Azb, or "Strike of the Prophet's Sword".
FEAR AND AIR STRIKES
Some of the displaced people said the most feared militants had disappeared overnight as soon as the army offensive was announced.
"It's very strange that those Taliban considered as anti-state disappeared mysteriously, but security forces continued to conduct raids on our houses and harass innocent people," said bank manager Wali Khan, 47.
"Why didn't they come out of their walled (army) compounds when the Taliban fighters were still in the town?"
He said he and other refugees had enough time to pack only the essentials for their journey and no one could say when they might be able to return home.
Breaking into tears, Khan added: "If I could, I would have brought my cow and other cattle. We left them behind and it was like leaving children behind."
Residents of the North Waziristan capital of Miranshah said more than two-thirds of families had left by Thursday, with some disappearing into the mountains.
Long queues stretched out of refugee centres where residents must register before leaving, as people waited for hours under the scorching sun. Women, some barefoot, used their head-to-toe burkas to shield children from the heat.
The army has launched daily air strikes in North Waziristan but a full-scale ground offensive has yet to start.
It relaxed the day-long curfew on Wednesday to allow residents to leave, triggering a sudden exodus into Bannu as well as Afghanistan's province of Khost where officials said at least 10,000 refugees were seeking shelter.
Officials in Bannu and nearby areas have registered 70,000 refugees, but the number is likely to rise as more people trickle out of North Waziristan.
The government has set up camps and refugee registration centres to control the flow, but some people said they would not use state facilities for fear of Taliban retribution.
"The Taliban have their informants everywhere, even at the registration centres and government departments," said Abdul Wasey, 32, who described himself as a science student.
"That is why we would rather die than receive any help from the government."
Others complained the government was doing too little.
"The government is treating us badly. We have done nothing. Those who were involved in militant activities have already fled," Abdul Rehman, 50, a resident of Miranshah, told Reuters. "Why we are being punished for someone else's crime?" (Writing by Maria Golovnina; Additional reporting by Haji Mujtaba in Miranshah; Editing by Clarence Fernandez and Robert Birsel)