After a gap of two years, India and Pakistan on Monday agreed to restore air links from January 1.

India had snapped the links after the December 13, 2001, Parliament attack, which it blamed on Pakistani terrorists.

Civil aviation authorities of the two countries met in New Delhi for the second day on Monday and took the decision.

A statement released at the end of the meeting said: "As per the request of Government of Pakistan, Government of India agreed to the removal of restriction on the type of aircraft up to Boeing 747 capacity to be used by the designated carriers of the two countries.

"Both sides agreed to hold further discussions to update the existing bilateral air services agreement at a mutually convenient date."

The bilateral talks are likely to be held later this month, sources said.

On Sunday Pakistan President Pervez Musharraf had announced the lifting of the ban on Indian overflights and granting them landing rights.

The first round of talks in Islamabad on August 27 this year had failed after Pakistan sought a guarantee from India on the issue of overflights.