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ISLAMABAD, Jan 13 (AFP) - Pakistan President Pervez Musharraf's crackdown on religious militancy received a warm international response Sunday but rival India remained sceptical and the nuclear-armed neighbours stayed poised for war.

Officials said almost 900 alleged Islamic extremists were arrested around Pakistan after Musharraf banned five militant Muslim groups during an address to the nation Saturday.

The groups included two accused by New Delhi of carrying out the December 13 attack on the Indian parliament, which brought the two countries to the brink of war.

Musharraf said he would not permit any terrorism in the name of divided Kashmir -- the cause of two of the three wars between India and Pakistan since independence in 1947.

But he added Pakistan would continue to support the Kashmiri independence movement in the Indian-administered part of the Muslim-dominated region.

He also warned India that any attempt to cross the border between the two nations would be met with "full force".

An estimated 800,000 Indian and Pakistani troops are massed along their shared border and there was sporadic shooting overnight between the two sides after the speech.

Indian Foreign Minister Jaswant Singh welcomed Musharraf's crackdown on Islamic militants but said Sunday New Delhi would judge his commitment by "concrete action taken" against "cross-border terrorism".

Nevertheless he held out an olive branch, saying India "cannot expect immediate action" and was willing to play its part in defusing a month-long stand-off.

Singh ruled out any third-party involvement in resolving the status of Kashmir, following an appeal for foreign mediation by Musharraf.

"Should the government of Pakistan operationalize its intentions and move purposely toward eradicating cross-border terrorism, we will be prepared to resume the dialogue process," he said.

The United States praised the speech by the Pakistani president, who has been a key ally in the US-led military coalition's campaign in Afghanistan.

President George W. Bush on Sunday called both Indian Prime Minister Atal Behari Vajpayee and Musharraf, urging them to work together to reduce tensions.

White House spokesman Sean McCormack said Bush praised Musharraf for his speech but would not elaborate on his conversation with Vajpayee.

Earlier, US Secretary of State Colin Powell said Musharraf had taken "a bold and principled stand to set Pakistan squarely against terrorism and extremism both in and outside of Pakistan."

He said Washington applauded the banning of the Jaish-e-Mohammed and Lashkar-e-Taiba groups accused by India of masterminding the parliament attack.

UN Secretary General Kofi Annan noted Musharraf's emphasis on "tolerance, the rule of law and the need to fight terrorism and extremism," said Annan's spokesman, Fred Eckhard.

"The secretary general takes this opportunity to reiterate his conviction that the differences between India and Pakistan can only be resolved peacefully," Eckhard said.

Pakistan newspapers said that although the speech included conciliatory gestures to international opinion, Musharraf had refused to bow to Indian pressure, including demands for the extradition of "20 most wanted" alleged terrorists.

The Nation newspaper said Musharraf had "drawn the line in the sand: this far but no further."

"This was the speech that was supposed to avert the threat of war. That it probably has not done in the sense of satisfying unending Indian demands," it said.

Arrests of alleged religious extremists continued Sunday in the wake of Musharraf's national address, with more than 500 being rounded up in the most populous province of Punjab, according to officials.

Hundreds more were detained in Sindh and Baluchistan, while dozens of offices were sealed and bans were enforced on the publication of extremist literature and the use of loudspeakers to protest against the crackdown.

In a bid to curb sectarian violence between the majority Sunni and minority Shiite communities, Musharraf Saturday also outlawed the Sunni extremist group Sipah-i-Sahaba Pakistan and its Shiite counterpart Tehreek-i-Jafria Pakistan.

Also banned was Tehreek-i-Nifaz-e-Shariat Mohammedi, which sent thousands of volunteers to Afghanistan to fight for the Taliban regime.

Previously unregulated madrassas, or religious schools, were also targeted, being brought under the same umbrella of rules and regulations which cover other schools.

"The day of reckoning has come," Musharraf warned extremists, saying the country faced a choice between becoming a theocratic state or a progressive and dynamic Islamic nation. 

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