Contrary to the Indian government's contention, the Bush Administration believes there is room for dialogue between India and Pakistan even as there is no let up in cross-border terrorism in Jammu and Kashmir.

US Secretary of State Colin Powell, briefing reporters at the Foreign Press Center in Washington, when pointedly asked if Washington regards India's war against terrorism as part of the global war, said, "We have condemned cross-border terrorism and it's a matter of discussions with our Indian and Pakistani colleagues at every opportunity. We, at the same time, recognise that there are still opportunities for dialogue.

"When you think of how far we have come in the past year with respect to the challenges we were facing in the subcontinent. Fourteen months ago, we were worried about a major war breaking out, that it might turn nuclear. Now we have seen the exchange of high commissioners. There have been other steps too."

But Vajpayee, a day after President George W Bush hosted a luncheon for him at the Waldorf Astoria, in his statement to the United Nations General Assembly had reiterated, "When cross-border terrorism stops - or when we eradicate it - we can have a dialogue with Pakistan on the other issues between us."