India has said it plans to respond positively to Pakistan's offer to stop firing along the de facto border that divides the territory of Kashmir.
Flowers in Srinagar: Many Kashmiris are said to be sick of the violence
A foreign ministry spokesman said India was willing to extend the ceasefire to the Siachen glacier, an icy battlefield
north of the Line of Control (LoC).
But he warned the ceasefire would fail unless Pakistan stops arming Kashmiri insurgents - a charge Pakistan denies.
Civilians routinely die in tit-for-tat artillery attacks along the LoC.
Kashmir bus service
Pakistan's Prime Minister, Zafarullah Jamali, made the surprise truce offer on Sunday in a speech marking his first year in office.
He said the country's army would stop firing at Indian positions across the Kashmir border from this week, when a festival is held marking the end of the Muslim fasting month of Ramadan.
"Our troops deployed along the LoC have been ordered to display complete ceasefire from the day of Eid," he said.
He also agreed to India's suggestion that a bus service start between the parts of Kashmir controlled by the two sides.
The BBC's Adam Mynott in Delhi says India's response has been guarded.
But he says the latest ceasefire offer is significant in that it comes from Pakistan's prime minister, rather than from the President, General Musharraf.
Earlier peace moves, led by General Musharraf and India's Prime Minister Atal Behari Vajpayee, have done little to ease the deadlock between the two countries.
Other peace proposals put forward by Mr Jamali in Sunday's speech included:
- Setting up a train service linking the two countries through the Thar desert
- Holding talks so that Indian and Pakistani prisons can release long-serving prisoners from each other's countries
- Setting up a ferry service between the ports of Bombay (Mumbai) and Karachi
- Allowing people aged over 65 to cross the border crossing at Wagah on foot
- Setting up another bus service between the Pakistani city of Lahore and Delhi.
Kashmir is claimed in its entirety by both countries and has been the cause of two of the three wars fought by India and Pakistan since independence from Britain in 1947.
For the last 14 years Kashmir separatists have staged an insurgency in the Indian-controlled part of the territory.
Civilians bear the brunt of artillery exchanges across the border
The armed forces of India and Pakistan exchange fire almost daily along the LoC, which was drawn up in 1971 and divides the disputed territory into two halves.
Civilians living near the border are routinely killed in the shelling, which both countries blame on each other's armies.
Last year, they massed hundreds of thousands of troops on the border following an attack on the Indian parliament, which India blamed on Islamic militants from Kashmir and Pakistani intelligence services.
The two sides have since restored full diplomatic ties and some transport links.
Relations between the two countries, while still tense, have improved this year.
But India has rejected bilateral talks with Pakistan until attacks in the Indian-controlled part of Kashmir stop.