As part of efforts to iron out differences within the coalition government in Jammu and Kashmir, Prime Minister Manmohan Singh held talks on Saturday with People's Democratic Party leader Mufti Mohammed Sayeed for the second time in three days on the reduction of troops in civilian areas.

Sayeed did not speak to media after the meeting, but official sources said the discussions had revolved around the formation of a committee to examine the issue of troop cuts in civilian areas, vacation of civilian properties occupied by security forces and the repeal of anti-terror laws.

The PDP has sought a political face for the committee, but the Centre politely turned down this demand, saying the panel, if formed, would be headed by a security expert, the sources said.

Further consultations will be held to advance this objective," Baru said.

The PDP had indicated that it might pull out of the Congress-led coalition government in Kashmir if the Centre did not concede its demand for troop cuts in the state.

The Congress, however, is strongly opposed to the move.

"The prime minister and Mufti Mohammed Sayeed held talks on the prevailing situation in Jammu and Kashmir. Talks were held in very warm and cordial atmosphere and covered all aspects of the current situation," Sanjaya Baru, Dr Singh's media advisor, told reporters after the meeting.

"There was near unanimity of views on what was needed to be done. Both leaders referred to the importance of the coalition government in Jammu and Kashmir," he said.

The Centre has agreed in principle to hold discussions with the PDP on forming the committee to study the demand for troop cuts.

Though details of the deliberations were not officially announced, sources said the Centre had agreed that once the committee was formed, it would visit Kashmir and assess areas where troop cuts could be made.

If any area was found fit for troop reduction, the Armed Forces (Special Powers) Act was also likely to be withdrawan from there, the sources said.

The Centre has agreed in principle to relocate troops from government schools and orchards but not from their area of operation. Both sides have also agreed on a greater role for the state police in security duties, the sources said.