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India and Pakistan began a cease-fire Wednesday all along the disputed Kashmir region in a new move to calm turbulent relations between the nuclear-armed rivals.

An Indian army official said the cease-fire went into effect at midnight Indian time on the Line of Control dividing Kashmir and positions on the Siachen glacier, the world's highest battleground, to the north.

A Pakistani soldier stands alert on the Line of Control in Chakothi sector, south of Muzaffarabad, capital of Pakistani Kashmir.  [AP]

"As per the instructions of the government, the orders have been implemented," Colonel R.K. Sen, spokesman of the Indian army's key northern command which is responsible for the rugged Kashmir frontier, told Reuters.

Indian and Pakistani troops, who are in close proximity at several places along the 460 mile control line in Kashmir, exchange gunfire nearly every day on one of the world's most militarized frontiers.

Hours before the truce went into effect, the two sides traded artillery and machine gun fire wounding three Pakistani children, police in the Pakistani part of Kashmir said.

"It's quiet along the line of control, there have been no reports of firing since the evening," said a duty officer for the police control center in Muzzafarabad, capital of Pakistani-controlled Kashmir.

Both armies said they were committed to observing the cease-fire "in letter and spirit," which extends to the frozen wastes of the Siachen glacier where the two are locked in battle since 1984.

Analysts say the cease-fire in Kashmir will help improve the atmosphere ahead of an expected visit to Islamabad by Indian Prime Minister Atal Behari Vajpayee for a regional summit in early January.

"We do hope that this cease-fire leads to a dialogue between the two countries that Pakistan has been asking for so often, and ultimately resolution of the Kashmir issue," said Pakistan military spokesman Major General Shaukat Sultan earlier.

New Delhi has so far rejected any possibility of Vajpayee holding talks with Pakistani leaders on the sidelines of the summit of the South Asian Association for Regional Cooperation Asia summit, saying Islamabad must first stop helping militants fighting Indian rule in Kashmir.

Islamabad denies funding, training and pushing the militants into Indian Kashmir to join the 14 year revolt there.

Analysts also cautioned against reading too much into the latest agreement, noting that fighting usually slows during winter in the Himalayan region.

"It is more symbolic than substantive," said Ershad Mahmud of the Institute of Policy Studies in Islamabad.

He said that the peace overtures were meant to show the international community, and particularly the United States, that the two countries were working to ease tensions.

Representatives of militant separatist groups in Muzzafarabad were suspicious of the cease-fire agreement.

"Pakistan may get some political benefit from the cease-fire because it initiated the move, but the real beneficiary is India, which will strengthen its positions and improve its bunkers," said one militant commander, who asked not to be named.

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