India and Pakistan have announced that passenger and freight trains between the two countries would resume on 15 January 2004 – after a gap of two years.

The popular Samjhauta Express would resume from the border town of Atari in India to Pakistan’s eastern city of Lahore.

"There was will on the Indian side to revive the rail links," said Mohammed Iqbal Khatri, head of the four-member Pakistani delegation, after two days of talks.

The train service was suspended on 1 January 2002 after India accused Pakistan’s spy agency and two Pakistan-based militant groups of involvement in the December 2001 attack on its Parliament, which almost sparked a war.

International diplomatic efforts eased tensions and in recent months both countries have taken steps toward peace, including the declaration of a ceasefire along their disputed Kashmir border, and an agreement to resume air links from 1 January 2004.

With the resumption of rail traffic "trade, commerce and people-to-people contact will definitely improve further," said S B Ghosh Dastidar, who led the Indian delegation.

The two countries also decided Friday to extend until January 2007 an agreement governing rail traffic. Any changes in the number of coaches or fares would be decided at regular meetings between officials of the two sides.