The mostly Muslim, Himalayan region of Kashmir is claimed by both India and Pakistan and has been a major focus of tension in South Asia. The nuclear-armed neighbours have fought two wars over the territory and clashes break out regularly along their de facto border, the so-called Line of Control.

About 7,000 villagers living around the village of Arnia area in Indian-controlled Kashmir gathered in schools after five Indian civilians were killed and dozens injured in shelling by Pakistani forces close to the border on Monday, according to Shantmanu, a government official in Jammu, a region of Kashmir.

"No one is able to sleep, not even the children. Everyone is hiding and is scared. Bombs are falling through roofs, we can't sleep under our own roofs, and we have to stay outside," a villager called Swardin said. The Indian and Pakistani militaries have traded machine-gun fire and mortar attacks for about a week, in skirmishes that cast a shadow over attempts to improve ties between the rivals.

Pakistan forces fired at 40 Indian army posts early on Tuesday, said Uttam Chand, an Indian police official. Indian forces retaliated with gunfire and mortar bombs, he said.

 India and Pakistan continued to exchange small-arms fire in the Poonch area on Tuesday afternoon, according to lieutenant colonel Manish Mehta, a spokesman for the Indian army.

"What we are seeing on the border is unusual in terms of its ferocity and the sudden eruption in violence," said Brahma Chellaney, a professor of strategic studies at the Centre for Policy Research based in New Delhi. "This is not the average tit for tat that we have seen in the past on the border."

India says Pakistan supports separatist militants that cross the Line of Control from the Pakistan side to attack Indian forces. Pakistan says India's military is abusing the human rights of Muslim Kashmiris.

Indian and Pakistani politicians on Tuesday accused each other's army of unprovoked violations of their border truce, as goodwill that had built up after Prime Minister Narendra Modi took office in May evaporated in the face of several weeks of sporadic fighting.

Sartaj Aziz, an adviser on foreign affairs to Pakistan's prime minister, accused the Indian government of failing to prevent the violence and called for an immediate ceasefire. Aziz blamed the Indian government for calling off talks between the two countries' top diplomats last month.

"The Indian side has shunned all our peace overtures," Aziz said in a statement. "All our efforts to secure peace and tranquility on the Line of Control and the Working Boundary have elicited no cooperation from the Indian side."

Indian Home Affairs Minister Rajnath Singh told a newspaper that Pakistan needs to learn that the newly elected Indian government will take a more aggressive approach if it comes under attack on the border.

"If our civilians are killed, India has every right to retaliate," Singh said in an interview published in the Hindustan Times.India and Pakistan's director of military operations spoke on the phone on Tuesday afternoon and both expressed concern about the ongoing ceasefire violations, according to an Indian military official. No steps to resolve the dispute were agreed, the official said.

Indian Prime Minister Narendra Modi surprised many observers by inviting his Pakistani counterpart, Nawaz Sharif, to his inauguration in May in an effort to improve ties. But relations have soured since Modi called off a round of talks in August after Pakistan's envoy in Delhi met with Kashmiri separatists before the proposed dialogue.

Sharif was weakened by opposition protests in August. He won the army's backing but in the process ceded space to the generals on some issues, including relations India.

Indian intelligence experts now believe Pakistan's military has asserted full control over the country's policy towards India after initial attempts by Sharif to reach out to New Delhi.

Modi's unilateral decision to cancel the foreign secretary talks in August weakened Sharif's position at home just when he was battling the opposition protests, one former Indian officer with long years of experience in Kashmir said.