The flights will restart three days before Indian Prime Minister Atal Behari Vajpayee is slated to be in Pakistan for a seven-nation regional summit.

"The two sides agreed to resume simultaneous air links and overflights with effect from January 1, 2004 on a reciprocal basis," a joint statement said after Indian and Pakistani aviation officials met in New Delhi.

The meeting was supposed to last two days but finished within hours after Pakistani President Pervez Musharraf said Sunday he favoured restored air links to show Islamabad was "sincere in its efforts for peace in the region."

Pakistan International Airlines will resume flights three times a week from Lahore to New Delhi and back. Indian Airlines will restart its service at the same frequency between Bombay and Karachi, officials said.

The overflight rights will let Indian carriers fly directly to Afghanistan, where India and Pakistan have been jockeying for influence since the fall of the Taliban regime in 2001.

The joint statement also said New Delhi will allow Pakistani planes up to the capacity of a Boeing 747, which can carry more than 400 passengers, to travel to India.

Previously India permitted only Pakistani aircraft up to the size of a Boeing 737, which has a capacity of fewer than 150 passengers.

India pulled its ambassador out of Islamabad and severed all transport links after a December 2001 attack on the Indian parliament, which it blamed on Pakistan-backed Islamic rebels.

The two countries deployed a million troops along their borders for 10 months after the parliament attack.

But the rivals have been working to repair relations since April this year when Indian Prime Minister Atal Behari Vajpayee offered Pakistan a symbolic "hand of friendship."

The two countries have reappointed ambassadors and on Wednesday began a ceasefire over their borders in divided Kashmir.

A bus service already resumed in July between New Delhi and the eastern Pakistani city Lahore.