Pakistan has said it will release an Indian fighter pilot whose jet came down over the disputed region of Kashmir during a dogfight between the two countries, in what prime minister Imran Khan referred to as a “peace gesture”.

International observers have urged the two nuclear powers to show restraint after they exchanged airstrikes and shot down one aircraft each this week, in their most heated exchange for two decades.

Addressing his parliament, the Pakistani prime minister said he had attempted to speak to his Indian counterpart Narendra Modi on the phone, and stressed that peace was “good for both sides”.

India welcomed the promise to return Wing Commander Abhinandan Varthaman, who has become a hero back home after Pakistan released video footage of him in captivity.

A spokesperson said the Indian air force was “extremely happy and look[ed] forward to the return of the Indian pilot”.

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

In the videos, which India described as a “vulgar display”, an injured Abhinandan was shown confirming his identity, drinking tea and thanking his captors for treating him well.

But speaking to reporters in Delhi earlier, a senior Indian government official said that even if Pakistan releases Abhinandan, India reserves the right to conduct further airstrikes against militant groups operating out of Pakistan.

The official’s words were in reference to Tuesday morning’s pre-dawn raid by Indian jets targeting the Pakistani region of Balakot, where – India says – a training camp was being operated by the Jaish-e-Mohammed (JeM) group. A total of 300 militants were reportedly killed in Tuesday’s airstrikes.

The group has claimed responsibility for the deadly car bombing in Pulwama, Kashmir, earlier this month that killed 40 Indian paramilitary officers and led Mr Modi to promise a “jaw-breaking response”.

The Indian official, speaking on condition of anonymity, provided greater detail regarding India’s account of the events leading up to Wing Commander Abhinandan’s capture.

He told The Independent that upwards of 10-15 Pakistani aircraft approached the line of control in Kashmir and targeted Indian military outposts, before either “missing” or aiming away.

The official said that, contrary to Pakistan’s account, the Indian jets which scrambled to respond did not cross over the line of control into Pakistani airspace. Abhinandan’s jet was the only exception, he said, when its forward trajectory after taking fire meant it came down on Pakistan’s side.

That would tally with the claims of villagers in Pakistan who said the pilot, after ejecting and parachuting to the ground, seemed not to know whether he had landed in India or Pakistan.

In a dramatic account of the events that followed, a local village chief alleges the pilot fired into the air and tried to flee before he was shot in the leg, caught and beaten by a group of local men and boys.

The chief told the BBC he personally intervened to stop the mob killing Abhinandan before Pakistani army officials arrived on the scene to take him into custody.

With the pilot’s safe return, Pakistan is inviting India to revert to diplomatic relations before a week that has seen Pakistani airspace shut to commercial air traffic and words of caution issued by the US, UK, China, Russia and others.

“Pakistan wants peace, but it should not be treated as our weakness,” Mr Khan said in parliament. “The region will prosper if there is peace and stability.”

India, however, accuses Pakistan of deliberately manufacturing what it called “war hysteria” in order to distract from India’s core demand – that Pakistan join it in taking action against the militant groups promoting separatism in Kashmir.

Mr Modi, in his first public comments since the downing of the planes, accused his country’s enemies of “trying to destabilise us”, and vowed that India would “fight, live, work and win as one”, though he did not refer to Pakistan by name.

The prime minister suggested “the world is observing” India’s response to the rising tensions between the two countries. At the same time, he said it was crucial nothing be allowed to undermine faith in India’s armed forces – “that our enemies don’t get the chance to question us”.

The two countries’ ground forces continued to exchange fire across their de facto frontier in Kashmir on Thursday, though the “ceasefire violations” were significantly reduced compared to the day before and are in any case not uncommon.

Lt Col Devender Anand, an Indian army spokesperson, said Pakistani soldiers were targeting nearly two dozen Indian forward points with mortar and gunfire, and that Indian soldiers were responding to the ongoing attacks.

Amid the rising tensions, Pakistan did accept and agree to investigate a dossier of intelligence provided by India to the Pakistani envoy in Delhi.

Pakistani prime minister Imran Khan extends offer to Modi for talks amid tension

India said it included both information regarding militant camps in Pakistan and “specific details of JeM complicity in the Pulwama terror attack”.

The violence this week marked the most serious escalation of the long-simmering conflict since 1999, when Pakistan’s military sent a ground force into Indian-controlled Kashmir at Kargil. That year also saw an Indian fighter jet shoot down a Pakistani naval aircraft, killing all 16 on board.

World leaders have weighed in, including US president Donald Trump who began a news conference on his talks with Kim Jong-un in Vietnam by referring to the India-Pakistan conflict, saying he thought “hopefully that’s going to be coming to an end”.

Mr Trump sparked confusion by saying he believed there was a “reasonably decent” development coming. An Indian official said it was unclear what the president meant but he may have been referencing the pilot’s release.

Foreign secretary Jeremy Hunt said the UK was engaged in “round-the-clock diplomacy” to try to defuse the “extremely dangerous situation”.