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Pakistan on Wednesday hit back at India for calling it a state sponsor of terrorism, saying New Delhi was trying to cover up "state terrorism" in the disputed Kashmir region.

"India's latest outburst is part of New Delhi's systematic smear campaign designed to divert world attention from state terrorism in Indian occupied Kashmir," Information Minister Sheikh Rashid told AFP.

Rashid was reacting to a statement by Indian Junior Foreign Minister Vinod Khanna who told New Delhi parliament that Pakistan "displays all the characteristic of a state sponsor of terrorism.

"It has consistently conveyed its assessment to the international community, including the United States," Khanna told the lower house of parliament in written reply to a question.

"It is for the United States government to consider whether Pakistan meets the criteria for designation as a state sponsor of terrorism under US laws," he said.

Indian Foreign Minister Yashwant Sinha told parliament despite the "evidence", the US had not included Pakistan in its list of states sponsoring terrorism.

"The US has not only declined to term Pakistan as a state sponsor of terrorism, it has also called it a stalwart ally ... It is only looking after its own interests and not the interests of anyone else," he said.

The Pakistani minister said the statement reflected the Indian leadership's "utter frustration over Pakistan's internationally acclaimed role in the global fight against terrorism."

Rashid said India, after failing to suppress the Kashmiris self-determination struggle sanctified in UN Security Council resolutions, had been routinely hurling baseless allegations.

"Their hands are stained with the blood of 80,000 Kashmiri people who have been mercilessly butchered over the past 14 years in Indian held Kashmir," he said.

A Pakistani foreign ministry statement later said the Indian accusations were a "classic case of the pot calling the kettle black."

"Its fascist government, that has committed genocide of Muslims by the thousands, surely qualifies India for the status of a terrorist state," it said.

India accuses Pakistan of sponsoring an Islamic rebellion in disputed Kashmir which is divided between the two south Asian rivals and is claimed by both. The insurgency has claimed more than 37,500 lives since it was launched 14 years ago.

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