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NEW DELHI, Tuesday (Reuters,AFP) India and Pakistan are to resume bus services, the foreign ministry said, in a move to improve relations between the nuclear-armed neighbours after they came close to war last year.

Renewing bus services carry particular resonance in India, bringing echoes of a bus journey made by Indian Prime Minister Atal Behari Vajpayee to the northern Pakistani city of Lahore in 1999 in what was ultimately a failed peace bid.

A foreign ministry statement said India would also release 70 Pakistani fishermen and 60 civilians held in Indian jails.

The decision is the latest in a series of reciprocal confidence-building measures begun last month by New Delhi and Islamabad meant to create a climate for eventual peace talks.

"The Prime Minister of India had emphasised the importance of people-to-people contacts for creating a conducive atmosphere in India-Pakistan relations," the foreign ministry said in a statement.

"Accordingly, the government of India has today approved the resumption of the Delhi-Lahore bus service, on twice a week basis, as soon as details have been worked out."

The buses between New Delhi and Lahore are hugely popular in South Asia, where many divided families live on either side of the border.

Meanwhile according to a report compiled by Kashmir state police Infiltration of militants into the Indian zone of Kashmir from Pakistan has come down in the last three weeks.

A top police official of the rank of deputy inspector general, who did not want to be identified, told AFP that the number of militant crossovers had come down because of "better border management" by Indian troops.

"The latest report has revealed that between May 1 and May 25 around 30 rebels sneaked into Kashmir, when during the corresponding period last year about 148 militants had infiltrated," he said.

He added that during the three week period alone troops killed 65 militants in Kashmir's border districts of Kupwara, Poonch and Rajouri.

The official also said that the army had found no evidence of claims by the militant group Hizbul Mujahedin that large training camps had been set up in Kashmir's districts of Anantnag, Pulwama , Baramulla, Poonch and Rajouri.

He suggested that the statement was given by Hizbul's chief Syed Salahuddin to deliberately mislead.

However, defence officials said that nearly 3,000 rebels were waiting across the border of Indian Kashmir to crossover into India.

"Our troops are fully prepared to meet any challenge. We have instructed our men to open fire on any intruder," the defence official said.

Meanwhile suspected Muslim rebels shot dead a former colleague, his wife and father in Kashmir, while one person was killed in cross-border firing between India and Pakistan, officials said Tuesday.

The gunmen late Monday barged into the home of Rafiq Gujjar in the remote village of Arin Dardpora in northern Baramullah district.

Gujjar's mother, sister and younger brother survived the shooting.

Police said Gujjar was a surrendered militant working with police.

No militant group has yet claimed responsibility for the attack.

In Surankote in the border district of Poonch, rebels overnight killed another Muslim civilian in a shootout and injured his wife.

Meanwhile a civilian was killed Tuesday and two others injured in a fresh exchange of artillery and mortar shelling by Indian and Pakistani troops along the defacto Kashmir border in the Nowshera sector of the southern Rajouri district, police said.

They said Pakistani troops opened "unprovoked fire" from across the Line of Control (LoC) - the 750-kilometre (465-mile) demarcation that splits Kashmir between India and Pakistan.

Indian troops returned fire in exchanges that continued for several hours.

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