The final phase of voting, covering frontier districts Poonch and Rajouri, which have seen the heaviest fighting between separatists and Indian forces, will be held next week.
Officials reported large turnouts in the first four phases except in the summer capital Srinagar. Officials said voters ignoring a boycott call had "made the separatists meet their Waterloo". It is the first time Kashmiris have gone to the polls in 27 years.
In Srinagar, the focus of the 16-year campaign for independence, most voters stayed away. Elsewhere, recently elected councillors have resigned and placed adverts in newspapers asking to be forgiven for participating in the election.
Chief Minister Mufti Muhammad Sayid said the turnout indicated a turnaround in the state.
"The voter turnout is an indication of a vibrant and fast developing civilised society which realises the importance of dialogue and participation whether in political matters or managing their civic issues," he said.
Indian Prime Minister Manmohan Singh complimented the people of Kashmir for participating "in the face of grave provocation".
He asked the local government and pro-Indian political parties to seize the opportunity by strengthening local bodies financially and by de-centralising administration.
"The state can benefit immensely from revitalisation of local government and de-centralisation of development administration," he told the state's Deputy Chief Minister Mangat Ram Sharma and Finance Minister Muzaffar Hussein Baig when they met him in New Delhi on Thursday.
Singh's Congress party with the regional Peoples' Democratic Party (PDP) and some other local groups are running a coalition government in Indian-administered Kashmir.
He said he appreciated the role of the state government in peaceful elections.
The separatists, however, rejected statistics saying they had been manipulated. Javed Ahmed Mir, chief of the Jammu Kashmir Liberation Forum, said: "People were either forced to vote or the ballot boxes were filled by the participating political parties and candidates in connivance with the polling officials."
Voters at most booths said their participation was voluntary.
The rejoicing by the state government and pro-Indian groups, however, seems to be short lived.
Voters during the second phase
of the municipal poll
The killing of two councillors and assaults on others by suspected separatist fighters has lead to a number of resignations.
At least 10 newly elected councillors have resigned and two more begged to be pardoned for contesting the civic polls at a Friday congregation. They also shed their party affiliations.
The others sought forgiveness for contesting the elections through advertisements in local newspapers.
"I was elected unopposed from Jamia Qadeem, Shaikh Mohalla, Ward Number 10, for the Beeru Municipal Committee of district Budgam on the (ruling) PDP ticket but now I'm making a passionate appeal to every mujahid organisation that from now onwards I'll have no relationship whatsoever with politics. I've resigned from the PDP," said Gulam Rasool Khan in an advertisement that appeared in the Srinagar Urdu daily Aftab on Wednesday.
Another ruling party activist, Mushtaq Ahmed Butt, a resident of Botapora, Khannabal, begged for forgiveness for having filed his nomination papers to contest the civic election from the southern Anantnag district.
"I'm making a passionate appeal to every mujahid organisation that from now onwards I'll have no relationship whatsoever with politics"
Gulam Rasool Khan appealing in the daily Aftab newspaper
He assured separatists that he had left politics and would have no involvement with the PDP or any other political party.
The moves were reminiscent of the early 1990s when the Kashmiri campaign for freedom became bloody and hundreds of workers of the then ruling National Conference and other pro-Indian parties announced their resignation through newspaper adverts in a last-minute effort to escape the wrath of the fighters.
A couple of days before the scheduled date of polling in Kashmir's central Budgam district, suspected fighters shot dead Gulam Mohiuddin Mir who had been recently elected unopposed on the ticket of the ruling PDP.
An alleged fighter reportedly asked Mir, 55, to go to neighbouring village Mirpore for a meeting on Monday.
Mir made the 35-minute journey only to be murdered. An unidentified gunman mowed him down upon arrival in the village. It remains unclear whether the assailant was the caller or someone else.
Protesters struggle with Indian
police last year
The slain man was a former government official who had left his job in January to contest elections for the municipal committee of his hometown.
Muhammad Maqbool Shah, alias Khaksar, the imam of a local mosque in Srinagar, who was elected on an NC ticket and was among the frontrunners to be Srinagar's mayor, was also gunned down.
Various Kashmiri groups asked people to boycott the poll on the basis that elections cannot be a substitute for self-determination.
India's former junior foreign minister and NC president, Omar Abd Allah, said the newly elected councillors would resign en masse if they were not provided with individual protection.
"They have contested elections despite threat to their lives but have now become a soft target as the authorities have failed to provide them security," he said.
Omar Abd Allah (L) with his
father Farooq Abd Allah
The ruling PDP or its allies have won most seats except for prestigious Srinagar Municipal Corporation and the Budgam municipal committee where the opposition National Conference carried the day.
An official spokesperson admitted most newly elected counsellors are feeling nervous. The government is faced with a Herculean task of ensuring their individual security, he said.