The issue of Indo-Pak tension came up on Thursday in the Union Cabinet meeting which was briefed by defence minister AK Antony and external affairs minister Salman Khurshid on the situation arising out of the January 8 incident in which two Indian jawans were killed, one of them beheaded by Pakistani troops.
Antony told the meeting, chaired by Prime Minister Manmohan Singh, that tensions have eased on the LoC since the 10-minute talk between the DGMOs on Wednesday, sources said.
He told the meeting that the ceasefire has been holding since on Wednesday and there has been de-escalation of tension, the sources added.
The Indian DGMO Lt Gen Vinod Bhatia and his Pakistan counterpart Maj Gen Ashfaq Nadeem had on Wednesday agreed not to allow escalation of tensions along the LoC.
Pakistan's DGMO conveyed that orders have been passed to the troops to strictly observe the ceasefire and exercise restraint, according to Indian army spokesman.
Khurshid told the meeting that Pakistan has indicated readiness for bilateral talks instead of its earlier suggestion for a UN probe into the incident, the sources said.
He is understood to have referred to statements made by Pakistan foreign minister Hina Rabbani Khar to this effect and said a view on the matter can be taken after receiving communication through the formal diplomatic channels.