Hoping for an 'era of peace' in South Asia, Pakistan on Friday said an early and peaceful settlement of the Kashmir issue with India in line with the 'aspirations' of the Kashmiri people will help the two countries achieve their full potential.

Pakistan government is 'committed to improving relations with India so as to usher in an era of peace in the region', Premier Yousuf Raza Gilani said during an interaction with veteran Indian journalist and parliamentarian Kuldip Nayar at the Prime Minister's House.

'An early and peaceful settlement of the Kashmir dispute in keeping with the aspirations of the people of Kashmir will help Pakistan and India to achieve their full potential,' Gilani told Nayar.

He noted that it was 'no coincidence that relations between the two countries always improve when a civilian government is in place in Pakistan'.

Gilani said his government would continue to take up more confidence-building measures (CBMs) to further improve bilateral ties in different fields.

'People-to-people contacts will also be increased to achieve the objective,' he said.

Gilani said that unlike India, 'where the transition is from democracy to democracy, in Pakistan it is from dictatorship to democracy and by that standard we were doing pretty well'.

'The restoration of the 1973 Constitution in its original form is the top priority of the government, for we want the Parliament to be supreme and sovereign. The constitutional balance as envisaged in the 1973 constitution will be restored,' he said.

The new government is committed to the independence of judiciary and reinstatement of judges deposed during last year's emergency. The modalities for their restoration are being worked out with the coalition partners of the ruling Pakistan People's Party, Gilani said.

These issues will be settled as the PPP is in the forefront of the movement for an independent judiciary and has made many sacrifices for it, he said.

Gilani expressed confidence that 'Pakistan will gradually shape up into a two-party system as was the case before 1998'.

Nayar said he was currently visiting Pakistan to attend a seminar in Lahore [Images] and meet political leaders after the formation of the new civilian government in Pakistan.

The meeting was attended by senior officials of ministries of information and foreign affairs.