The Ghauri-2 missile was launched at 1035 local time (0535 GMT) from Tilla Jogain in the district of Jhelum, 160km (100 miles) east of Islamabad.

The BBC's Owen Bennett-Jones: "Missiles that could deliver nuclear warheads"

Pakistan Foreign Minister Sartaj Aziz told the BBC the Indian Government had broken an agreement to show restraint by testing the Agni-2 missile, and Pakistan was left with no choice if it was to maintain a strategic balance in the region.

Long-range weapon

The Ghauri-2 is thought to have a range of 2,300km - comparable to India's Agni-2 missile which was test-fired on Sunday.

This would allow it to deliver warheads deep into Indian territory.

The new missile is an updated version of the Ghauri-1, which was tested a year ago.

Prime Minister Nawaz Sharif confirmed that the missile was a new model, contradicting earlier reports that the launch was a re-test of Ghauri-1.

Mr Sharif congratulated Pakistani scientists and engineers for their achievement.

Some reports say Pakistan is planning a further test over the ocean, to establish the new missile's full range.

'Arms race'

Pakistan's missile test followed meetings on Tuesday by senior military and political figures, to discuss how to respond to the Indian test.

Foreign Minister Sartaj Aziz: Strategic balance

Pakistani officials say in private they cannot afford to get into an arms race with India, according to BBC Islamabad Correspondent, Owen Bennett-Jones.

But for the moment, Islamabad seems wedded to its traditional policy of matching India's military development step by step.

'India secure'

The BBC's Owen Bennett-Jones: "This is a tit-for-tat response by Pakistan to the Indian tests"

The Indian Prime Minister, Atal Behari Vajpayee, has meanwhile said India has achieved minimum nuclear deterrence with the Agni-2 missile tests.

"Now India is fully secured," the prime minister told members of his ruling Bharatiya Janata Party.

But he added: "Our missile should not cause concern to anyone."

India has not yet commented directly on the latest Pakistani missile test.

But Foreign Minister Jaswant Singh said the two countries' missile tests would not affect peace talks.

"There is no arms race, there is no danger," Mr Singh said.

Tit-for-tat tests

In May last year, the two countries conducted tit-for-tat nuclear detonations - leading to US-backed economic sanctions.

Western diplomats believe that for all the improvements in Indo-Pakistani relations, Islamabad and Delhi remain committed to developing missile systems which could deliver nuclear warheads.