Sharif made the remarks while chairing a meeting here of the ruling PML-N's parliamentary party to discuss the security situation and other national issues.
"Prime Minister said that we are going through an extraordinary situation, and this situation demands tough decisions," according to a statement released by the Prime Minister's Office.
"Without eliminating terrorism and extremism we cannot place Pakistan on the fast track of development. We will take every step to bring peace and stability in the country," Sharif said.
The statement did not give details on the government's plans to tackle militancy though Geo News quoted Sharif as saying that it was necessary to seek the opinion of lawmakers on a dialogue with the Taliban.
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Parliamentarians' opinions should be taken into consideration regarding the dialogue process with the Taliban, he was quoted as saying by the channel on its website. The meeting also decided that political parties would be taken into confidence regarding the government's future course of action, the report said.
There is intense speculation that the military would be asked to launch targeted operations in North Waziristan Agency, a haven for Taliban and Al Qaeda elements. Over 30 troops were killed in recent Taliban attacks, including a suicide bombing near the army headquarters in Rawalpindi.
According to the official statement, Sharif also said Pakistan believes in peaceful relations based on respect "with all our neighbours including India".
"We need to begin a new era of peace and stability in the region, which will be beneficial for Pakistan as well as the whole region," he said.