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By Altaf Hussain
BBC News, Srinagar
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Nayeem Khan accused Mr Geelani of not consulting member parties
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Two prominent members of the hardline faction of the main Kashmiri separatist alliance - the All Parties Hurriyat Conference- have quit the group.
The move is being seen as a setback to faction leader Syed Ali Shah Geelani.
Nayeem Khan and Ghulam Mohammad Hubbi criticised Mr Geelani for attacking a change in Pakistan's Kashmir policy.
Earlier this month, members of the moderate wing of the Hurriyat Conference held their first ever talks with an Indian prime minister.
Both Nayeem Khan, leader of the National Front, and Ghulam Mohammad Hubbi of the People's Conference party said they disagreed with Mr Geelani's stance on Pakistan.
Mr Geelani says President Pervez Musharraf's government has diluted Pakistan's stand on Kashmir.
India and Pakistan began peace talks last year, and the leaders of the two countries have met on several occasions.
'Realistic' stand
Mr Hubbi told a press conference that there was no alternative to dialogue.
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"Pakistan's approach is realistic," he said.
Mr Khan also accused Mr Geelani of ignoring the constituent units of the alliance in decision-making.
"As chairman, Geelani has disappointed us. He does not take us into confidence" he said.
However, Nayeem Khan endorsed Mr Geelani's stand on the armed struggle, saying that "guns will fall silent after India has ended its occupation of Kashmir."
Earlier, a Shia leader, Aga Syed Hassan quit Mr Geelani's faction to join the moderates led by Umar Farooq.
Mr Farooq led the delegation which met Indian Prime Minister Manmohan Singh.
Meanwhile, Indian troops have killed four militants in a firefight, south of the capital Srinagar.
A defence spokesman says the fighting broke out after the troops launched a search operation in the village of Sugan Imam Saheb in Pulwama district on Wednesday morning.
The exchange of fire continued until Wednesday evening.
India accuses Pakistan of training, arming and funding Islamic militancy in the region, a charge Islamabad strongly denies.
Pakistan admits extending only "moral, political and diplomatic support" to Kashmiris seeking independence from India.
More than 40,000 people have died in the insurgency in Kashmir.