A joint statement however said the two sides would meet again for further talks on the Wullar barrage but did not give any date.

It was agreed to settle the dispute according to the provision of the 1960 Indus Basin Treaty, which divides six rivers starting in or running through Indian-controlled part of Kashmir between India and Pakistan, it said.

"The discussions would continue at the next round of the dialogue process with a view to finding a solution to the issue consistent with the provision of the treaty," the joint statement said.

The talks on Wullar are part of an eight-point agenda chalked out by the rival neighbours to resolve their disputes through a dialogue initiated earlier this year.

India started construction of the barrage, about 30 kilometers (19.5 miles) north of Indian Kashmir's summer capital Srinagar, in 1985 but halted it two years later after objections raised by Pakistan.

The World Bank-guaranteed 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.

Pakistan says the construction violates the Treaty and would affect the flow of the Jhelum river water into Pakistan. India argues the project would in fact regulate the water flow and benefit Pakistan.

The Pakistani side in the talks was led by Secretary Water and Power Ashfaq Mehmood while the Indians were headed by Secretary Water Resource Ministry V.K. Duggal.

Both Mahmood and Duggal reported progress during the talks.

"The important thing is that the talks were held in an absolutely friendly and constructive manner," Duggal told a joint news conference with Mahmood.

"And both sides discussed each others' point of view. The observations were made and discussed with an open mind and it is not possible to reach conclusion on such technical observations immediately," he said.