The Indian government said Saturday it would unblock most mobile telephone lines in Kashmir in a major easing of a two-month-old security clampdown since cancelling the region's autonomy, but a grenade attack in the main city highlighted tensions over New Delhi's actions.

Police said militants threw a grenade in a market area near the old town in Srinagar injuring seven people.

Most stores, schools and businesses across Kashmir have been closed since the Hindu nationalist government brought the region under tighter central control on August 5.

But the easing of the communications blockade was the latest bid by the authorities to show that its tough policies were working.

Government spokesman Rohit Kansal told a press conference in Srinagar, just before the grenade blast, that authorities had decided to end the phone blockade after a security review in the Muslim-majority Himalayan region.

All phones linked to a monthly subscription "will stand restored and be functional from noon on Monday," he said, adding that the measure would apply to all of Kashmir.

- Tourists welcome -

The New Delhi government imposed a mobile phone and internet blackout as part of a huge security clampdown to back its annulment of Kashmir's constitutionally guaranteed autonomy.

Tens of thousands of extra troops were also sent in an operation that critics said virtually cut off Kashmir from the outside world.

Kansal said restrictions on public movement had been lifted in "99 percent" of Kashmir but gave no indication on whether internet services would also be restored.

The government, however, on Thursday lifted restrictions on tourists travelling to the region and released three politicians among hundreds of people detained after August 5.

Kansal said all those detained would be released gradually after their cases are reviewed.

The leader of the opposition Congress party in the region, G.A. Mir, was sceptical of the government's announcement.

"We have been hearing for days that they would restore mobile phones. So unless they actually do this on Monday, this is just another one of their announcements," he told AFP.

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He also questioned the move to lift restrictions for tourists, when authorities have been saying throughout the clampdown that "life is normal" in Kashmir.

"The government claims not a single bullet was fired. Then what was the panic situation that tourists were forced to leave in the first place?" Mir said.

Iltija Mufti, a daughter of Kashmir's former chief minister Mehbooba Mufti, one of the politicians in detention, said international pressure has forced the government's hand but the response was "very little, very late."

India maintains that most people in its part of the disputed region support the move to take away the special status.

It had faced international calls however to ease the clampdown, including from UN human rights chief Michelle Bachelet.

The phone clampdown caused widespread hardship, according to activists and community leaders. It meant ambulances and other emergency services could not be called to take patients to hospitals.

Iltija Mufti said that without internet people could not pay their mobile phone bills, "so what's the point of opening mobile lines? Will they get a service?"

Kashmir has been split between India and Pakistan since their independence in 1947. The two countries have fought two wars over the territory and cross-border clashes regularly erupt.