The inaugural service on Saturday marked the restoration of commercial road transport links between the two cities. The two leaders clapped and cheered as the buses arrived.

Atal Behari Vajpayee: "Today's inaugural run is only a beginning"

"India and Bangladesh will perhaps make railway service available for their peoples in coming years," Mr Vajpayee told a gathering of officials and local residents who cheered as two multicoloured buses decked with flowers pulled up at a state-run cultural centre.

The service "heralds a new chapter in the relations between our two friendly countries," Mr Hasina said.

The BBC's David Chazan: Progress on transport links well behind schedule

The two leaders had earlier held an hour of talks on boosting trade and cooperation. But BBC Dhaka Correspondent David Chazan says that so far Bangladesh has resisted pressure for a broader agreement allowing more traffic to travel between them.

Protests over Kashmir

A few streets away from the welcoming ceremony, several hundred protestors from Muslim groups waved black flags and chanted "Vajpayee, go back home," and "Stop genocide in Kashmir."

Mr Vajpayee had earlier faced a demonstration by 600 activists from the Islamic Khelafat movement on his arrival in central Dhaka.

Many delighted at new service

An estimated 3,000 Bangladeshis make the 360km trip to Calcutta in West Bengal state every day.

Mr Vaypayee was greeted with flowers at Dhaka airport

From 29 June, there will be two buses a day in each direction between the two cities. At the moment, travellers have to walk across the border, and wait for as long as six hours for a connecting bus.

Bangladeshis are reported to be delighted with the new service, with the 10-hour journey costing $11 each way.

"I wish to get on board the first bus," said Sadia Afrin, a Bangladeshi woman studying at an Indian university. "This will be so easy now."