Indian shelling has forced thousands of villagers from their homes in Pakistani-controlled Kashmir.
Raja Farooq Haider, the prime minister of Pakistan-held Kashmir, told reporters on Tuesday the government may have to provide shelter to up to half a million people if India escalates its "aggression" across the Line of Control.
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The prime minister said the government has so far made arrangements for sheltering some 50,000 villagers.
Waqar Noor, a member of Kashmir's Legislative Assembly, said authorities were making arrangements to accommodate thousands of villagers from Bhimber, who are currently sheltering in open fields or the homes of relatives.
Noor said the villagers would most likely shelter in schools, but the government may set up a "tent village" if the number of evacuees keeps growing.
The evacuation from villages in Bhimber district came after seven Pakistani soldiers were killed by Indian shelling on Monday.
The two sides have repeatedly traded fire in recent weeks across the Line of Control that divides the Himalayan region.
The nuclear-armed rivals each claim Kashmir in its entirety, and have fought two of their three wars over its fate.
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Wakalat Hussain, a farmer from the village of Bania, said the shelling and heavy gunfire forced the villagers to flee, leaving their homes and animals behind.
"Like thousands of others, I'm lying here under the open sky with five children and my wife, with no arrangements for food and shelter," Hussain said by phone. "At least we don't have to fear being killed by the constant Indian shelling."
Another farmer, Muhammad Khadim from the village of Kheruwal, said he, his wife and their seven children passed a sleepless night listening to the shells explode before fleeing from their home near the Line of Control.
India says it has been retaliating for Pakistani violations of a 2003 ceasefire. An Indian army officer said Pakistani troops fired across the frontier for nearly four hours on Tuesday. He spoke on condition of anonymity because he was not authorised to brief reporters. He said there were no Indian casualties.
Source: News Agencies