Cross-border attacks could cause recent thaw in relations to plunge back to pugnacious impasse of the 1990s

An escalating war of words between India and Pakistan over cross-border attacks in Kashmir has tarnished hopes that the newly elected government in Islamabad will succeed in reviving peace talks between the feuding neighbours.

Accusations and counter-claims have raged since Monday, when India said five of its soldiers guarding the Line of Control (LoC) in the divided and disputed state of Kashmir were killed in an ambush by gunmen from Pakistan.

The flare-up of cross-border tensions has come during a bloody week in Pakistan. On Thursday, a suicide bomber attacked the funeral of a policeman who was shot dead earlier in the day in Quetta, a troubled city in the south-west periodically attacked by religious and sectarian militants.

Almost 40 people were killed at the gathering in an open area near a mosque, 21 of whom were police officers, including one of Quetta's most senior police officers.

Also on Thursday, Delhi reacted to days of public outrage of the killing of its soldiers by significantly hardening its rhetoric over Monday's attack in Kashmir, directly implicating Pakistani soldiers for the first time.

India's defence minister, A K Antony, told parliament that "specialist troops of the Pakistan army were involved in this attack".

Immediately after the incident, Antony had merely said the attack was carried out by militants who were accompanied by "persons dressed in Pakistan army uniforms", violating a 2003 ceasefire agreement.

India's febrile media and opposition parties, already gearing up for elections next year, attacked the government for being too soft on Pakistan.

"We all know that nothing happens from the Pakistan side of the Pakistan Line of Control without support, assistance, facilitation and often, direct involvement of the Pakistan army," Antony added.

On Wednesday, hundreds of Indian Youth Congress activists staged a violent protest near the Pakistani high commission in Delhi, prompting Islamabad to formally protest what it saw as an attempted "attack" on their diplomatic mission in the Indian capital. There were also anti-Pakistan demonstrations in other major Indian cities.

Indian soldiers cross a footbridge near the Line of Control in Kashmir. Photograph: Mukesh Gupta/Reuters

Pakistan said claims it was involved in the Monday attack was Indian propaganda, and also complained that gunfire from Indian soldiers had killed a civilian on the Pakistani side of the de facto border that neither side officially recognise.

Islamabad earlier complained over another incident on Tuesday, shortly after the killing of the Indian soldiers, when it claimed "unprovoked Indian firing" injured two of its soldiers.

Similar outbreaks of violence in January, which included accusations by India that one of its soldiers had been beheaded by a cross-border raiding party, stymied efforts by politicians on both sides to open serious talks.

Some analysts fear such attacks are deliberately orchestrated by elements within the Indian and Pakistani army opposed to rapprochement between the two countries.

Pakistan's prime minister, Nawaz Sharif, who was elected in a landslide victory in May, is determined to make progress, vowing to "pick up the threads from where we left in 1999", the last time he was in office and attempted to fix a relationship poisoned by three wars since the partition of the subcontinent in 1947.

At a meeting with government officials in Islamabad on Thursday, Sharif "expressed his sadness over the recent incidents", a statement by Pakistan's foreign ministry said.

He was also reported to have said that "it is incumbent upon the leadership of both sides not to allow the situation to drift and to take steps to improve the atmosphere". He also called for better communication between the Indian and Pakistani armies to prevent misunderstanding.

Pakistan has proposed dates for talks with India on some of the outstanding disputes between the two countries, but India is yet to reply. There are fears the uproar could derail hopes of a meeting between Sharif and the Indian prime minister, Manmohan Singh, in New York in September, on the sidelines of the UN general assembly.

Imtiaz Alam, one of the Pakistani founders of the South Asia Free Media Association, which campaigns for peace in the subcontinent, said Sharif would have to assert his authority over the country's military. "He will have to take some very clear, very tough steps," he said.

"If he doesn't take those steps that can create the right environment the Indians will start doubting his capacity to fulfil his promises."