I can say that India remains committed to finding answers to the issues that confront us today

Indian Foreign Minister Jaswant Singh

In Pakistan, President Pervez Musharraf told a meeting of clerics that he believed his country would not go to war with India.

The two nations have been engaged in a tense confrontation along their border, after Delhi blamed Pakistan-based militants for an attack on its parliament last month.

On Friday Indian officials dismissed as "baseless" a report on the official Pakistani news agency that an unmanned Indian spy plane had been shot down in Pakistani airspace.

Earlier this month, Pakistan denied reports by the Indian army that one of its spy planes had been shot down over India.

Change of tone

Mr Powell addressed a news conference on Friday with his Indian counterpart, Jaswant Singh, after meeting Prime Minister Atal Behari Vajpayee and senior officials.

He spoke of a three-stage process involving a change in the language of exchanges between the two countries, new diplomatic and political steps, and eventually a de-escalation of the military build-up.

Both countries have beefed up their forces on the border

In what appeared to be a change of tone, India said it welcomed action taken by Pakistan to curb terrorism and was waiting to see it translate on the ground in Kashmir.

"I can say that India remains committed to finding answers to the issues that confront us today," Mr Singh said.

Terrorist list

India wants Pakistan to hand over 20 alleged terrorists that it said were behind a host of criminal acts including bombings, abduction and narcotics trafficking.

For his part, Mr Powell indicated that there could be movement on the issue since India had provided additional information to the Pakistanis.

"If they are Pakistanis and can be brought into custody [in Pakistan], action can be taken against them in accordance with Pakistani law," Mr Powell said.

Mr Powell is trying to revive dialogue between the two rivals

On the other key issue, the secretary of state said he understood India's need to see that General Musharraf was stopping militant groups from carrying out attacks the border.

In a key speech to the Pakistani people last Saturday, General Musharraf said any extremist groups based in Pakistan carrying out attacks in Indian-administered Kashmir would be dealt with severely.

He also banned two groups, Lashkar-e-Toiba and Jaish-e-Mohammad, which Delhi says were behind the December attack on its parliament which triggered the current crisis.

The secretary of state is hoping India will respond to the moves announced in General Musharraf's speech and that both countries will resume negotiations in order to resolve their military stand-off.

"The situation has been very dangerous and continues to be dangerous," he told the American television channel, ABC, earlier. But our correspondent says he is being careful not to put public pressure on the Indian Government.