Vajpayee says that there is no consensus on a greater Naga state

Separatist Naga rebels have been demanding that Naga-inhabited territories should be merged with the present state of Nagaland.

"If state boundaries are to be changed, it can only be done by evolving a political consensus," Mr Vajpayee told journalists in the state capital, Kohima, at the end of a three-day visit.

Some 25,000 people have died in violence in Nagaland since India's independence in 1947.

At present there is no political consensus on changing the boundaries here Indian Prime Minister Atal Behari Vajpayee

On Tuesday, Mr Vajpayee urged the separatists to give up violence and hold peace talks.

He said that unless peace was restored, the private sector would not be interested in investing in the region.

Factions

Analysts say Mr Vajpayee's announcement suggests there are no takers for a greater Nagaland in Delhi.

The prime minister's announcement will come as a great relief to people in the states of Manipur, Assam and Arunachal Pradesh which neighbour Nagaland, correspondents say.

The three states have long feared integration of their Naga-inhabited areas with that of Nagaland.

Generations of rebels have fought the same battle

But Mr Vajpayee's remarks are likely to upset Naga rebels, who are now negotiating for a unified homeland after more than 50 years of fighting.

The two most powerful factions of the main Naga separatist group, the NSCN, have already reiterated that they will not give up their demand for a greater Naga state.

Mr Vajpayee said peace talks were still continuing with the rebels.

"We would like the talks to conclude and succeed as soon as possible," he said.

The NSCN's Issac-Muivah faction has been negotiating with the Indian Government for the last six years.

Apart from a ceasefire which has held between the rebels and Indian troops, there have been few results so far.