Indian commander Lieutenant General R K Karwal on the ceasefire breach
India and Pakistan have accused each other of breaching a ceasefire in the disputed territory of Kashmir.
Firing between the two armies went on for hours along the Line of Control dividing the region. India said one of its soldiers was killed.
The two sides met on Tuesday to discuss the clash - one of the most serious since the 2003 truce was agreed.
India and Pakistan claim the disputed region in its entirety and have gone to war over it twice since independence.
Militants have been fighting Indian rule in Kashmir since 1989 at a cost of more than 60,000 lives.
Officials say the fighting stopped after intermittent small arms fire ended on Tuesday morning.
We have material evidence to suggest that the Indian soldiers crossed the LoC
Pakistani military statement
India says its soldier was killed by Pakistani troops who crossed the LoC on Monday to protest against a new bunker. India insists the bunker is on its side of the LoC - Pakistan disagrees.
Pakistan's military says it was Indian troops who breached the ceasefire, crossing the LoC into Pakistani-held territory and opening "indiscriminate" fire first without provocation.
"No Pakistani soldier had crossed the LoC," a Pakistani military spokesman said on Tuesday.
He also denied Indian reports that Pakistani troops were killed in the fierce overnight gun battle.
"We have material evidence to suggest that the Indian soldiers crossed the LoC and wanted to establish a bunker post on the Pakistani side.
"After the fire fight, Indian soldiers were forced to flee from the area leaving behind their weapons."
This is the biggest violation of the ceasefire in the last five years
Indian military spokesman Anil Kumar Mathur
Correspondents say that while such firing incidents across the LoC are rare, allegations of ceasefire breaches underline how fragile the peace is.
The latest fighting was arguably the most serious threat so far to the November 2003 ceasefire.
The BBC's Altaf Hussain in Srinagar says both sides showed some restraint in the clashes and refrained from artillery exchanges.
On Monday, the Indian army accused Pakistani troops of "the biggest violation of the ceasefire in the last five years".
Tension between the two sides has heightened
Spokesman Anil Kumar Mathur told the BBC that 10 to 12 Pakistani soldiers entered Indian territory to protest against the construction of the new Indian bunker.
Lt-Col Mathur said that one Indian soldier was also wounded on Monday before the Pakistani soldiers retreated to their side of the LoC, firing at Indian soldiers as they did so. Indian troops returned fire.
Our correspondent says that it is unclear exactly how the latest clash - the longest since the ceasefire was signed - began. There are some reports that Pakistani troops were carrying a white flag.
India and Pakistan have accused each other of breaching the truce several times in recent months.
In May, the Indian army said there had been "unprovoked" firing on two occasions from Pakistani troops, killing an Indian soldier.
The latest violence comes after talks between senior officials from India and Pakistan to step up confidence-building measures in divided Kashmir.
The neighbours and rivals nearly went to war in 2002 but began a peace process two years later. Little progress has been made on issues at the core of their dispute.
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