Indian Prime Minister Atal Behari Vajpayee has said he hopes to meet his Pakistani counterpart in January.
Mr Vajpayee plans to visit Pakistan next year
India's Government had earlier said it would not talk to Pakistani leaders until they stopped militants entering Indian-administered Kashmir.
Pakistan - which denies sponsoring the Kashmir insurgency - had invited Mr Vajpayee to a regional summit taking place in Islamabad next year.
Both countries declared a surprise ceasefire in Kashmir on Tuesday.
Mr Vajpayee told reporters in the Indian town of Lucknow: "The programme for my visit to Pakistan is being finalised."
Asked whether he would meet the Pakistani Prime Minister, Mir Zafarullah Jamali, Mr Vajpayee said he would be "very pleased if there is a meeting".
Kashmir has been the source of two India-Pakistan wars
Pakistan's Information Minister, Sheikh Rashid Ahmed, had issued an invitation to Mr Vajpayee earlier in November.
Islamabad is hosting the Saarc summit of south Asian countries in January, and Pakistani officials have made no secret of their wish to see Mr Vajpayee take part.
While the summit will focus on issues such as trade and commerce, there will be an opportunity for Indian and Pakistani politicians to meet on the sidelines to discuss more contentious issues - such as Kashmir.
Both India and Pakistan control a portion of the old Himalayan kingdom of Kashmir, and both say they have a right to the whole.
Two of their three wars since independence have been fought over the divided territory.
Tit-for-tat artillery attacks across the informal border, or Line of Control (LoC), have been a daily fact of life for many Kashmiris.
Tuesday's ceasefire along the rugged LoC marks the first time in 14 years that Indian and Pakistani guns have fallen silent.
The truce came about after India accepted a unilateral Pakistani ceasefire offer, made on Sunday.
However, India has cautioned that the ceasefire remains fragile, until Pakistan can rein in the militants fighting against its rule in Kashmir.
Pakistan has denied fuelling a 14-year uprising in the state, which has left tens of thousands dead.
Islamabad claims only to offer diplomatic backing to what it says is an indigenous insurgency.
No high-level talks yet
Mr Vajpayee's visit to Islamabad is seen as critical to advancing the peace process he initiated in April this year.
Mr Ahmed had earlier told the BBC the people of Pakistan had a high regard for Mr Vajpayee and see him as a visionary leader.
He is the only leader capable of breaking the India-Pakistan impasse, he said.
Though some progress has been made in terms of reducing tension and the two countries have restored bus links and re-appointed high commissioners in Delhi and Lahore, there has so far been no dialogue at a level senior enough to push forward the peace process.