In a significant gesture, the government on Thursday said it was ready to 'welcome' Kashmiris who had gone to Pakistan-occupied Kashmir if they were ready to return after giving up militancy.
Pakistan Foreign Minister Khurshid M Kasuri had stated that the entire territory of Jammu and Kashmir is 'disputed territory'.
Indian Army sources said Pakistan Army is using Kashmiris in PoK as cannon fodder and Indian security forces are ready to deal with any eventualities along the LoC.
A police constable was also injured in an encounter that is still going on.
Indian officials claimed that the white helicopter crossed into the Indian airspace in Gulpur sector and hovered over there for sometime before turning back.
In a statement outfit chief Syed Salahuddin said there would be no peace in the valley until the residents are allowed to decide their own fate.
Militant leaders will come overground at an appropriate time, the Hizbul chief said.
Musharraf responded to Singh by saying that there was "complete autonomy" in PoK and Gilgit but "he was open to consider if anything further needs to be done in this case," it said.
He was arrested while he was demonstrating against the Kashmir policy of Pakistan President Pervez Musharraf.
"We are told that Chinese soldiers are there to provide protection to their ongoing projects related to their railways, road and hydro-electric projects and it is basically for security purposes," the Army Chief said in an interaction with media persons.
At least 80 people were killed and dozens more injured as heavy rains and flash floods caused havoc in parts of Pakistan over the past three days, with the government calling out the army to help cope with the situation at several places.
The United States on Monday night removed from the State Department's website a map of India showing Pakistan occupied Kashmir as part of Pakistan after New Delhi raised objections to it.
"The troops along LoC in Tangdhar sector observed some suspicious movement past midnight. On being challenged, the militant opened fire at Army positions which was retaliated," an Army spokesman said in Srinagar.
He also said that Pakistan would not do anything as what Prime Minister Modi was doing "would create a backlash that would bring his downfall."
Two militants were killed in an overnight encounter with security forces in Keran sector near the Line of Control in Kashmir as they were trying to exfiltrate to Pakistan-occupied Kashmir, a defence spokesman said.
India has conveyed its concern to China over the presence of Chinese personnel in Pakistan- occupied Kashmir (PoK) and asserted that it was consistently strengthening its capabilities in the eastern sector to meet any challenge.
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"At least 15 terrorists are being specially trained in POK for an attack on Baghliar dam across Chenab at Chanderkote-Ramban, 150 kms from Srinagar", Mohammad Shafakat and Mohammad Adnan, the two Lashkar-e-Tayiba miltants arrested on Saturday told media-persons.
The JKNPP claims there are 124 such detenus.
"With a view to further consolidate the confidence building initiatives already taken, it has been planned to liberalise the entry permit system for cross-LoC travel by bringing in features like triple entry permits valid for one year and completion of the verification process within six weeks," Home Minister Shivraj Patil said.
Musharraf says he will nominate Vajpayee for his country's highest civilian honour, the Nishan-e-Pakistan, if the two neighbours moved forward towards solving the Kashmir dispute.
Kasuri said that in the meeting with PoK leaders, he emphasised that Pakistan's policy on Jammu and Kashmir was based on the premise that its final settlement had to be in accordance with the wishes and aspirations of Kashmiri people.
Among the first four militants who launched the violent secessionist movement in Kashmir in 1989, separatist leader Yaseen Malik on Thursday left on his first visit to the Pakistan-occupied-Kashmir in 17 years.
Asserting that there is a large presence of Chinese troops and workers in Pakistan occupied Kashmir, Northern Command Chief Lt Gen T K Parnaik on Tuesday said that China would not like to "interfere" in border conflict between India and Pakistan.
The army chief also made it clear that a decision in this regard has to be taken by the government.
Maharaja Hari Singh requested military assistance from the government of India, paving the way for induction of Indian troops in Jammu and Kashmir.
The government on Thursday said that Mumbai terror attack mastermind and Lashkar-e-Tayiba founder Hafiz Saeed had visited the border areas in Pakistan-occupied Kashmir a few days before the killing of two Indian soldiers by Pakistani troops.
The five heavily-armed Pakistani infiltrators were killed immediately after they sneaked across the Line of Control from Pakistan-occupied Kashmir in Machil sector in Jammu and Kashmir.
"Chinese engineers have been spotted in areas across Line of Control (LoC) (in PoK)", General Officer Commanding (GOC) of 25 Infantry Division, Maj Gen K H Singh told media persons at Rajouri, 170 km from Jammu, on Thursday.
Interior Minister Faisal Saleh Hayat made this suggestion on the BBC World's weekly programme Question Time Pakistan broadcast on Friday.
Some 300 militants sneaked into Jammu and Kashmir in the first six months this year - considerably higher than the figure of 100 recorded in the same period in 2005 and 225 in 2004.
A senior police officer said that the family comprising three men, four women and ten children crossed over to the Indian side of the Line of Control in north Kashmir's Uri sector on Friday afternoon to return to their homes. The family had crossed over to PoK in 1990 and had been living there since.
The Indian criticism of the Pakistani action comes three days after it objected to harassment of some leaders of occupied Kashmir by Pakistani intelligence agencies after their return from India.
China and Pakistan on Thursday dismissed as "baseless" reports about the presence of Chinese troops along the Line of Control in Pakistan-occupied Kashmir.
All the terrorist camps and around 15 launch pads in Pakistan-occupied Kashmir "are full", according to top army commander Lt Gen B S Raju, who anticipates an increase in infiltration attempts from across the border this summer to replenish the diminishing terrorist cadres in Jammu and Kashmir.