India and the United States have agreed to establish a joint working group to counter terrorism after high-level talks in London.

The agreement followed two days of discussion between India's Foreign Minister, Jaswant Singh and US Deputy Secretary of State, Strobe Talbott.

A statement issued by the Indian foreign office said the two officials conducted a "dialogue on security, non-proliferation, disarmament and related issues".

The December hijacking of an Indian airliner to Afghanistan also featured in the discussions.

"They agreed to work together to ensure that the perpetrators of the hijacking of Indian Airlines flight 814 were brought to justice as part of their joint efforts to combat international terrorism," the Indian statement said.

The counter-terrorism working group will meet in Washington in early February.

The hijacking has led to a deterioration in relations between India and Pakistan with a sharpening of rhetoric between the two countries.

Mr Singh said in an interview with BBC World that India remained "committed to dialogue and reconciliation".

But he had some sharp criticism of Pakistan, which India has accused of involvement in the hijacking.

"Pakistan has to recognise that this compulsive hostility it demonstrates towards India must cease," he said.

"I don't want to concentrate only on the hijack at Kandahar but there is a need for Pakistan to come to terms with reality."

He firmly denied any Indian involvement in Monday's bomb blast in Karachi and said it was Pakistan that was "conducting a clandestine war".

Pakistan would need to "abjure violence" and show "a demonstration of giving up encouragement to cross border terrorism" if tensions between the two countries were to be reduced, he said.

Fundamental differences

The meeting between Mr Singh and Mr Talbott was the 10th round of talks between the two officials since May 1998, when India and Pakistan conducted nuclear tests.

India and the United States still have fundamental differences on the nuclear issue.

Washington has long been trying to persuade Delhi to curtail its nuclear weapons and missile programmes and to sign the Comprehensive Test Ban Treaty (CTBT).

India has insisted that it must retain a credible minimum nuclear deterrent.

Mr Singh said India had not yet agreed to sign the treaty though he pointed out that his government continues "to observe the voluntary moratorium on any further testing".

Last week, British Foreign Secretary Robin Cook said Britain also wanted to see progress towards a signing of the CTBT by India, as this would help to reduce tension in South Asia.

First US presidential visit in 20 years

The nuclear rivalry between India and Pakistan is at the heart of international concern about stability in the region.

Relations between India and the United States deteriorated sharply after the Indian nuclear tests in 1998.

But there are signs of a thaw.

The US Treasury Secretary, Lawrence Summers is currently in India and President Clinton is expected to go to India in the next few months.

If he does, it will be the first US presidential visit there in more than 20 years.

"There is a declared intention," Mr Singh said. "The president (Clinton) has expressed great interest in visiting India and we look forward to it."