Kandahar, Nov 22 : The Taliban denied that its fighters holed up in the besieged northern city of Kunduz had agreed to surrender to Northern Alliance forces, the Al-Jazeera satellite television channel reported.

"The office of Mullah Omar strongly denied that and the Taliban army chief Akhdar Othmani said the information was totally false," correspondent Mohammad al-Shuli reported from the southeastern city of Spin Boldak.

The Taliban said that its deputy defence minister, Mullah Mohammad Fazil, who would have negotiated any agreement to surrender, is in Kunduz, with the town's defenders. The fighters' situation in Kunduz is good and they have good morale, Al-Jazeera quoted the Taliban officials as saying.

Several hundred Northern Alliance soldiers advanced today towards Kunduz to take up positions for a threatened offensive against the Taliban's last stronghold in northern Afghanistan amid reports most of the militia was ready to give up.

An estimated 3,000 to 9,000 fighters are trapped in the city, including Arabs, Chechens and Pakistanis from terror suspect Osama bin Laden's Al-Qaeda network.

Northern Alliance commander Makhmoud Safdar said the Islamic militia, facing a Thursday morning deadline to give themselves up or be attacked, reached an overnight agreement to end the more than week-old standoff. "About 97 percent of the Taliban are to surrender. And we are going to fight those who refuse to lay down their arms," Safdar said."One way or another, we are entering the city of Kunduz today," added Safdar, deputy to General Nazir Mahmad who is directing the Northern Alliance's operations on this front.

The loss of Kunduz would leave the Taliban, which once controlled 90 percent of the country, with only their southern bastion of Kandahar. But even there, local leaders are trying to negotiate a handover of the city.