The chief minister of Indian-administered Kashmir has rejected a suggestion by Prime Minister Atal Behari Vajpayee that Delhi could impose direct rule ahead of elections.

Farooq Abdullah said presidential rule was meant only for extreme situations where authority in the state had broken down.

I think it is time that fair elections are held in Jammu and Kashmir

Prime Minister Vajpayee

"There is no such option - that government of India can put president's rule under any circumstance, unless law and order machinery has broken," he said.

Mr Vajpayee said earlier on Friday he would consider such action if he thought it were needed to ensure a free vote in the disputed state later this year.

"I think it is time that fair elections are held in Jammu and Kashmir and for that, if need be, I shall even have president's rule," he told reporters in the northern city of Lucknow.

Correspondents say Delhi wants to be able to present Kashmir as a normal Indian state where citizens turn out freely and in large numbers to choose their leaders.

Bloodshed, however, continues. Police in Indian-administered Kashmir say 21 people have been killed in violent incidents since Thursday.

Tensions ease Mr Vajpayee also ruled out war with Pakistan over Kashmir, but said Indian troops would stay on the border.

Kashmiris are due to vote by mid-October

He said tensions had eased and India was ready for talks on the long-running dispute - but not before Pakistan "stopped cross-border terrorism permanently".

The two nuclear powers have massed a million troops along the border since parliament in Delhi was attacked in December, but tensions eased recently after massive international pressure.

G8 leaders meeting Canada backed calls for Pakistan to end cross-border militant incursions.

"Pakistan must put a permanent stop to terrorist activity originating from territory under its control," a summit statement said.

Poll challenge

The elections in troubled Indian-administered Kashmir must be held by mid-October.

In the past, polls have been held amid allegations of vote-rigging and intimidation of voters.

Chief Minister Farooq Abdullah recently handed over the leadership of the ruling National Conference to his son, Omar Abdullah, a minister in Mr Vajpayee's government.

He is expected to hand over the job of chief minister to his son before the election campaign begins, and thereby effect the transfer of power to a leadership trusted by Delhi.

The main alliance of Kashmiri separatists, the All-Party Hurriyat Conference, has rejected the elections and urged Kashmiris to boycott it.

India has dismissed a British suggestion that international observers could monitor the Kashmir vote as an infringement of its sovereignty.