An attack on tourists in India's Himalayan territory of Kashmir this week sparked a new crisis between nuclear armed South Asian neighbours India and Pakistan, with New Delhi blaming militants with "cross-border linkages" for the killings.

Relations between India and Pakistan are cratering following a deadly militant attack in Indian-administered Kashmir that has sparked tit-for-tat reprisals and raised fears of another military escalation between the nuclear-armed rivals.

Troops from Pakistan and India exchanged fire overnight across the Line of Control in disputed Kashmir, officials said yesterday, after the United Nations urged the nuclear-armed rivals to show "maximum restraint" following a deadly shooting in the region.