They also agreed that the fight against armed groups operating within their borders should not be allowed to affect the peace process.

"Action on terrorism should not be linked to the composite dialogue process," the statement said.

The meeting was only the second high-level talks between the two nations since last year's attack on the Indian city of Mumbai, which New Delhi blamed on a Pakistan-based group.

Mumbai dispute

November's attack on Mumbai stalled a fragile peace process, launched in 2004, which was aimed at resolving a number of issues between the two neighbours, including the dispute over the divided Himalayan territory of Kashmir.

Sticking points

 Kashmir:  Both India and Pakistan claim territory to be their own. Have fought two wars over the unresolved dispute.
 Siachen Glacier: This piece of territory on the Himalayas is the site of the world’s highest-altitude military conflict. Since 1984, both countries have fought a bitter and frosty war over rival territorial claims.
 Terrorism and extremism: India blames Pakistani-based armed group for attack on Mumbai.
 Nuclear weapons: both are nuclear powers and deterrence remains a concern.
 Detainees: Treatment of each other’s prisoners.
 Martime border: Demarcation of boundary at Sir Creek off the Kutch coast in the Arabian Sea.
 Sharing of Himalayan water resources: Indian hydro-electricity project on Chenab river has particularly angered Islamabad.

"Until Mumbai, everything was going well," Saeed Naqvi, an Indian newspaper columnist, told Al Jazeera.

"But the Mumbai attack was a huge setback and then we went into the Indian elections and it was impossible for anyone to pick up such a huge hot potato at that time."

New Delhi has criticised Islambad for not handing over suspected plotters of the Mumbai attacks, which left at least 166 people dead.

But Pakistan said this week that it would "probably" put the five accused of involvement in the attacks on trial shortly.

In remarks clearly addressed at Pakistan on Wednesday, Singh said that the "infrastructure of terrorism" must be dismantled.

Speaking to delegates at the summit on Wednesday, Gilani expressed some optimism over the direction that relations between the two nuclear powers were taking.

"There has recently been some forward movement in our relations with India," he said.

"We hope to sustain this momentum and move towards comprehensive engagement. We believe durable peace in South Asia is achievable."

The two nations have fought three wars, two of them over Kashmir, since they were separated in 1947 following the end of colonial British rule.

More than 50 heads of state from the developing world are in Sharm el-Sheikh for the summit which was called to tackle the impact of the global economic downturn.

India, along with host Egypt, was one of the founding members of the Nam, the largest grouping of countries outside of the United Nations, which was founded in 1955 to give a voice to the developing world.