"Ideas and proposals were exchanged to take the (peace) process further. Discussions were held in a positive and constructive atmosphere," Indian foreign ministry spokesman Navtej Sarna told reporters at the end of a first round of negotiations in New Delhi between senior diplomats from both sides.

The talks, between Indian Foreign Secretary Shashank, who uses only one name, and his Pakistani counterpart Riaz Khokhar, will continue into a final day today, Sarna said.

The discussions are being held against a backdrop of surging violence in Kashmir and the surprise resignation of Pakistani prime minister Zafarullah Jamali on Saturday.

Sarna said the proposals exchanged yesterday were aimed at "creating mutual trust and better understanding" between the two sides, who have fought three wars, two of them over Kashmir.

"Clearly the aim was ... to carry this process forward," he said.

Masood Khan, Pakistan's foreign ministry spokesman, was equally upbeat.

"The atmospherics were positive," Khan told a press conference at the Pakistani High Commission here shortly after Sarna had briefed the media.

"The talks were held in a conducive atmosphere. Both sides engaged each other intensely, fully and professionally. There were no difficulties and there was a free flow of communication and exchange of ideas and views."

The discussions were the first between the nuclear-armed neighbours on Kashmir, their number one cause of disagreement, since a peace initiative collapsed in 2001.

The two delegations will tackle today the more complex issue of resolving the dispute over Kashmir, which is divided between India and Pakistan and claimed in full by both.

"There will be talks tomorrow on Kashmir. The attempt is to find a solution. Khan said.

"Now we are focused on dialogue ... the political leadership on both sides is trying to come up with solutions acceptable to the people of India, Pakistan and Kashmir."

He said Sunday's talks had focused on confidence-building measures such as lowering of troop numbers along the borders in Kashmir.

They also discussed the question of soldiers missing in previous conflicts and the repatriation of errant civilians, especially fishermen who had strayed into each other's waters.

According to India's Sarna, also on the table are issues such as a bus service linking the two zones of divided Kashmir, another connecting Sindh in Pakistan with Rajasthan in India and the opening of consulates in Bombay and Karachi.