Indian Prime Minister Atal Bihari Vajpayee indicated Wednesday that his country had exhausted efforts at peace with neighbouring Pakistan and was being forced to fight a ''decisive battle'' to settle the dispute over Kashmir, where he is on the second day of a three-day tour.

On Tuesday, as Vajpayee began his tour of Kashmir, unidentified gunmen shot dead Abdul Ghani Lone, the tallest of moderate Kashmiri politicians, in an apparent attempt to sabotage crucial elections to provincial assembly scheduled for September.

Lone was a leader of the All Party Hurriyat Committee (APHC) an umbrella organisation for political groups that are divided between those seeking independence for Kashmir and those that favoured a merger of the Muslim-majority Indian state with Pakistan.

Indian intelligence agencies said they had evidence that members of the Lashkar-e-Toiba (Soldiers of God), a Pakistan-based 'jihadist' organisation, was responsible for Lone's assassination.

Speaking to troops at Kupwara, close to the Line of Control (LoC) that divides the territory between the Indian and Pakistan controlled portions of Kashmir, Vajpayee was confident that India would win the war that he expected. ''Let there be no doubt about it that we have won every war forced upon us [by Pakistan] in the last 54 years.''

Vajpayee said India was faced with a situation where the world understood its predicament but preferred to be silent about it. ''We now have to defend ourselves. All peace efforts with our neighbour have failed.''

At a press briefing in New Delhi, foreign ministry spokeswoman Nirupama Rao said Pakistan High Commissioner in India Asjraf Jehangir Qazi has been told that India's patience is now exhausted and ''Pakistan should not live under any illusion that it can capture Jammu and Kashmir [as the state is officially called]''.

Integral part of India

Qazi, who has been expelled from India, was told that ''Kashmir is and shall remain an integral part of India,'' Rao said.

Qazi's expulsion was part of punitive diplomatic measures taken by India following a terrorist attack on an army camp near Jammu last week, which left 34 people dead, most of them wives and children of servicemen. Vajpayee visited the site on Tuesday.

Islamabad lost no time in responding to Vajpayee's unusually provocative speech broadcast over state-run television channels, and said it would resort to ''full force'' if attacked.

The two countries have between them massed over a million troops along their 1,800 km common border and placed their navies and air forces on full alert.

''The Indian leadership should desist from such blatant war-mongering and instead focus on addressing their internal problems as well as resolving peacefully their many disputes with their neighbours,'' a Pakistan Foreign Ministry statement declared.

Vajpayee said his very presence in Kashmir carried significance: ''Whether our neighbour understands the significance or not and whether the world takes note of it or not, we are about to write a new victorious chapter in history.''

Although Vajpayee began his visit with the hope of helping along a faltering political process that he initiated a year ago, the assassination of Lone, the one politician who advocated a settlement of the Kashmir issue through dialogue with both India and Pakistan rather than militancy, seemed to have queered the pitch.

Lone had become the target of hard-liners in the APHC ever since he declared at a conference of Kashmiri leaders in Dubai last month that following the Sep. 11 attacks against the United States, armed militancy had become counter-productive and the time had come to push for a settlement through dialogue.

Since the Dubai meet, the 14-party APHC has been split down the middle between moderates led by Lone and Mirwaiz (a hereditary title) Umar Farooq, who seek the independence for Kashmir, and the pro-Pakistan faction led by Syed Ali Shah Geelani, who insist that only a holy war could settle the issue.

Curiously enough, Lone was killed at a rally in Srinagar to commemorate the 12th anniversary of the assassination of the previous Mirwaiz, Maulvi Mohammed Farooq, the father of Mirwaiz Umar Farooq.

While Lone's supporters blame Pakistan's shadowy Inter Services Intelligence (ISI) for carrying out Lone's assassination, Geelani wasted no time in going on record to say that he suspected Indian intelligence agencies of being behind the killing.

The chief minister of Kashmir, Farooq Abdullah, was quick to lay the blame on neighbouring Pakistan, with which India has threatened to go to war unless it desisted from indulging in what New Delhi calls ''cross-border terrorism'' aimed at securing possession of Kashmir.

Diplomatic efforts

International diplomatic efforts, the most recent being a visit to New Delhi and Islamabad last week by US Assistant Secretary of State for South Asia, Christina Rocca, have failed to defuse the situation.

In fact, Rocca's arrival in New Delhi coincided with the killing near Jammu of 34 people by a suicide squad, which only worsened the confrontation between the nuclear-armed neighbours. The victims included the wives and children of servicemen in the family quarters of an army camp that Vajpayeee visited on Tuesday.

Pakistan has denied involvement in the attacks.

In a televised speech on Jan. 12, military ruler President Pervez Musharraf announced that his country would no longer support militant activity in Kashmir. But in the same breath Musharraf said ''Kashmir runs in the blood of Pakistanis''.

Indian leaders have said that the continuing strikes were proof that Musharraf was either unwilling or unable to stop 'jihadist' attacks by militant groups such as the Laskhar-e-Toiba and the Jaish-e-Mohammed (Army of Mohammed).

Former prime minister Inder Kumar Gujral, who has been trying to build people to people contacts between India and Pakistan, said Pakistan was as much a victim of 'jihadist' terrorism as India. He cited Britain's announcement Wednesday of a drastic reduction in its diplomatic staff in Pakistan.

Britain has also closed down its visa offices in Islamabad, Karachi and Lahore and advised its nationals to leave the country in view of threats to the safety of British interests in the country, according to news reports.