The dispute centres around India's plans to construct the Baghliar Dam over the Chenab river in Indian-controlled Kashmir's Jammu region. The dam is being built in two 450-megawatt phases.

Pakistan says the dam in Chandrakot in southern Doda district violates the 1960 Indus Water Treaty on river water sharing, one of the nuclear rivals' most enduring agreements that has held through two wars between the countries.

Islamabad fears the dam could interfere with the flow of water from the Chemab river and deprive it of vital irrigation in Pakistan's wheat-growing Punjab province. New Delhi says the fears are groundless.

"We are not violating the Indus Water Treaty," said federal cabinet minister Sharif Naiz.

The World Bank-negotiated accord bars India from interfering with the flow of the three rivers feeding Pakistan -- Indus, Chenab and Jhelum -- but allows it to generate electricity from them.

The first phase of the Baghliar Dam was due to be completed in 2004 but has been delayed by the dispute.

India and Pakistan are also trying to negotiate a solution to another dispute over construction of the Wullar barrage on the river Jhelum, some 30 kilometres (20 miles) north of Indian Kashmir's summer capital, Srinagar.

India began constructing the barrage in 1985 but halted it two years later after Islamabad said the construction would affect the flow of Jhelum river water into Pakistan.

While the Wullar Barrage is part of an eight-point agenda chalked out by the rivals to resolve various disputes through a dialogue launched in January 2004, the Baghliar dam is not on the list.

India and Pakistan held an inconclusive round of talks on the Wullar project last July.

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