Indian army soldiers stand near the wreckage of an Indian helicopter after it crashed in Budgam area, outskirts of Srinagar, Indian controlled Kashmir

Pakistan has said it will release the Indian pilot that was captured yesterday as a “gesture of peace”, prime minister Imran Khan announced.

The pilot, who is currently in custody, will be allowed to leave on Friday as efforts to cool the crisis between the two nuclear-armed neighbours continues.

Locals were forced to flee from their homes in Kashmir as India and Pakistan exchanged gunfire through the night.

Jet fighters were seen over the mountainous region one day after the two nuclear-armed nations had claimed to have shot down each other’s warplanes.

There were no immediate reports of casualties but those living in the disputed region were seen fleeing the area with no imminent ceasefire in sight.

Pakistan shoots down Indian fighter jets: Reaction in pictures Show all 28 1 /28 Pakistan shoots down Indian fighter jets: Reaction in pictures Pakistan shoots down Indian fighter jets: Reaction in pictures Activists of Al-Badr Mujahideen, an islamic militant group, burn an effigy of Indian Prime Minister Narendra Modi during an anti-India protest in Peshawar, Pakistan AFP/Getty Pakistan shoots down Indian fighter jets: Reaction in pictures A Pakistani girl holds a light candle during a vigil for peace in Lahore on March 3 AFP/Getty Pakistan shoots down Indian fighter jets: Reaction in pictures School children react as they celebrate the release of Indian Air Force pilot Wing Commander Abhinandan Varthaman by Pakistan at a school in Ahmedabad Reuters Pakistan shoots down Indian fighter jets: Reaction in pictures Indian pilot, Wing Commander Abhinandan, stands under armed escort near Pakistan-India border in Wagah Reuters Pakistan shoots down Indian fighter jets: Reaction in pictures Indian Border Security Force soldiers patrol along the border with Pakistan EPA Pakistan shoots down Indian fighter jets: Reaction in pictures A videograb allegedly shows the captured Indian Air Force pilot in the custody of Pakistani military SWNS Pakistan shoots down Indian fighter jets: Reaction in pictures Pakistani civil society activists hold anti-war signs during a peace rally in Islamabad AFP/Getty Pakistan shoots down Indian fighter jets: Reaction in pictures Pakistani civil society activists hold anti-war signs during a peace rally in Islamabad AFP/Getty Pakistan shoots down Indian fighter jets: Reaction in pictures Activists of Al-Badr Mujahideen, an islamic militant group, burn an effigy of Indian Prime Minister Narendra Modi during an anti-India protest in Peshawar, Pakistan Reuters Pakistan shoots down Indian fighter jets: Reaction in pictures Kashmiri villagers look on at the smouldering wreckage of an Indian fighter jet after it was shot down by the Pakistani military AP Pakistan shoots down Indian fighter jets: Reaction in pictures Indian soldiers and Kashmiri onlookers stand look on as an Indian army helicopter lands near the site where an Indian Air Force jet was shot down by the Pakistani military AFP/Getty Pakistan shoots down Indian fighter jets: Reaction in pictures An Indian soldier gestures near the wreckage of an Indian Air Force fighter jet that was shot down by the Pakistani military AFP/Getty Pakistan shoots down Indian fighter jets: Reaction in pictures Supporters of a Pakistani religious group Islami Jamiat-e-Talaba brand Indian Prime Minister Narendra Modi a terrorist at a rally to condemn Indian aggression AP Pakistan shoots down Indian fighter jets: Reaction in pictures Indian soldiers and Kashmiri villagers look on at the smouldering wreckage of an Indian fighter jet after it was shot down by the Pakistani military AFP/Getty Pakistan shoots down Indian fighter jets: Reaction in pictures India's Border Security Force soldiers patrol along the fenced border with Pakistan on February 26 Reuters Pakistan shoots down Indian fighter jets: Reaction in pictures Protesters in Pakistan march against Indian Prime Minister Narendra Modi after the Indian airstrike on allege Pakistan terrorist camp EPA Pakistan shoots down Indian fighter jets: Reaction in pictures Supporters of India's ruling Bhartiya Janta Party workers hold Indian flags as they celebrate the Indian airstrike on allege Pakistan terrorist camp AP Pakistan shoots down Indian fighter jets: Reaction in pictures Protesters in Pakistan march against Indian Prime Minister Narendra Modi after the Indian airstrike on allege Pakistan terrorist camp EPA Pakistan shoots down Indian fighter jets: Reaction in pictures People in India burn an effigy that represents Pakistan as they celebrate the Indian airstrike on allege Pakistan terrorist camp Reuters Pakistan shoots down Indian fighter jets: Reaction in pictures Indian soldiers and Kashmiri villagers look on at the smouldering wreckage of an Indian fighter jet after it was shot down by the Pakistani military AFP/Getty Pakistan shoots down Indian fighter jets: Reaction in pictures Bhartiya Janta Party workers hold Indian flags as they celebrate the Indian airstrike on allege Pakistan terrorist camp EPA Pakistan shoots down Indian fighter jets: Reaction in pictures Pakistani Kashmiris in the border town of Chakoti walk past India-bound cargo trucks that are parked as the road to India is closed AP Pakistan shoots down Indian fighter jets: Reaction in pictures Pakistani Army soldiers escort journalists to the scene where Indian fighter jets struck in a violation of Pakistani airspace EPA Pakistan shoots down Indian fighter jets: Reaction in pictures Pakistani Army soldiers escort journalists to the scene where Indian fighter jets struck in a violation of Pakistani airspace EPA Pakistan shoots down Indian fighter jets: Reaction in pictures Pakistani Army soldiers escort journalists to the scene where Indian fighter jets struck in a violation of Pakistani airspace EPA Pakistan shoots down Indian fighter jets: Reaction in pictures Workers enter a concrete bunker that they have built in a residential area near the border Reuters Pakistan shoots down Indian fighter jets: Reaction in pictures Pakistani soldiers and journalists gather at the site where Indian fighter jets struck in a violation of Pakistani airspace AFP/Getty Pakistan shoots down Indian fighter jets: Reaction in pictures Pakistani soldiers and journalists gather at the site where Indian fighter jets struck in a violation of Pakistani airspace AFP/Getty

Members of Indian prime minister Narendra Modi’s Bharitiya Janata Party (BJP) called for more military action, suggesting the conflict could worsen.

An Indian government source told The Independent that relations with Pakistan would not return to normal, even with the return of their pilot.

World powers have called on the nations to de-escalate the tensions which started after a suicide car bombing on 14 February killed more than 40 Indian paramilitary personnel.

But the risk of conflict rose dramatically on Tuesday when India launched an air strike into Pakistani territory on what it said was a militant training base – the first such raid since the two nations’ 1971 war over territory that later became Bangladesh.

New Delhi claimed at least 300 militants were killed in the strike, while Pakistan said no one was killed.

The situation escalated further yesterday when Pakistan said it had shot down an Indian aircraft and captured a pilot.

India acknowledged one of its jets was “lost” and that its pilot was “missing in action”.

India also said it shot down a Pakistani plane, something Islamabad denied.