The leaders of Bangladesh, Bhutan, India, the Maldives, Nepal, Pakistan and Sri Lanka attended the two-day South Asian Association for Regional Cooperation (SAARC) summit in the Bangladesh capital Dhaka.

In a closing address, Bangladesh's Prime Minister Khaleda Zia said she believed the Dhaka meet would mark a watershed and herald real improvements in the lives of the region's 1.4 billion population, millions of whom live in abject poverty.

"Let us assume responsibility to make SAARC a confident instrument of cooperation to our countries' and our peoples' benefit," she said, adding that the summit was declaring the next 10 years the "SAARC decade of poverty alleviation".

"I have every confidence that it will open a new chapter in the history of South Asia," she said.

In addition to tackling poverty, the leaders also agreed to set up a disaster preparedness centre in the Indian capital New Delhi following two devastating natural disasters in the region -- December's killer tsunami and last month's Kashmir earthquake.

An agreement was also reached to allow Afghanistan to join the SAARC grouping.

The seven nations further agreed on a range of joint strategies aimed at combating terrorism, according to the summit declaration which was formally adopted at the closing session.

On the economic front, it was agreed that all negotiations on outstanding issues that have held up the implementation of the South Asian Free Trade Agreement (SAFTA) would be concluded by the end of November. This would ensure that the pact would come into effect as originally planned on January 1, 2006.

The deal will create the world's biggest free trade area and is seen as the best hope of raising living standards in South Asia.

A proposal by India for a South Asian open skies agreement that would remove restrictions on flights operated by state-owned and private airlines from seven countries would also be examined by SAARC officials.

The summit marks the 20th anniversary of SAARC's creation in Dhaka in 1985 with the aim of reducing poverty and forging economic cooperation.

South Asia is home to half the world's poor, with 40 percent living on less than a dollar a day, according to the World Bank.

The next summit will take place in India.

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