By Terry Friel and Kamil Zaheer
NEW DELHI, April 18 (Reuters) - Declaring their peace process irreversible, nuclear rivals India and Pakistan agreed on Monday to open up the militarised frontier dividing Kashmir, capping a landmark visit to New Delhi by President Pervez Musharraf.
In a significant coming together, Musharraf and Indian Prime Minister Manmohan Singh said they would work towards a "soft border" in Kashmir, opening meeting points for divided families and boosting trade, travel and cooperation across the frontier.
Reading a joint statement as he stood next to Musharraf, Singh said the two, "conscious of the historic opportunity created by the improved relations and the overwhelming desire of the peoples of the two countries for durable peace...determined that the peace process was now irreversible".
Analysts said the focus on building trust, softening the border and improving the lives of ordinary Kashmiris marked a major departure from the past, when the two sides have banged heads together over their rival territorial claims.
Both Singh and Musharraf suggested this new approach could eventually lead to a settlement of their dispute over Kashmir, at the heart of half a century of hostility and which almost sparked a fourth war in 2002.
"This is what I call going towards a soft border," Musharraf had said earlier. "But a soft border is not a final solution."
The joint statement said terrorism would not be allowed to derail peace efforts and clearly warned Islamic separatists fighting Indian rule that neither side would tolerate attacks on a just-launched bus service uniting the divided Himalayan region.
The two leaders agreed to increase bus services across the ceasefire line and open the fenced and heavily guarded frontier, once dubbed the world's most dangerous flashpoint by the United States, to freight trucks and pilgrims.
"I think the outcome has been better than I expected," Musharraf, due in Manila later on Monday, told reporters earlier.
The two took no questions after Singh read out the statement.
The contrast with a failed summit in the Indian city of Agra in 2001 was dramatic, and highlighted by Musharraf himself.
"There was tension, now there is friendship, there is harmony," he said. "We were angry, now we are happy."
Singh was reported as telling senior Indian editors that "General-sahib" was a man he could do business with.
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The three-day visit by the Delhi-born Musharraf was originally intended as an informal trip to watch Pakistan play India in cricket -- Pakistan won on Sunday -- but effectively turned into a summit with Singh, born in what is now Pakistan.
"I was cautiously optimistic about the peace process. Now, I am optimistic," said Uday Bhaskar, of the Institute of Defence Studies and Analyses and New Delhi.
"The spirit of this round of talks as reflected in the joint statement showed that neither side is trying to score brownie points but is cognisant of the concerns of the other."
Amid heavy security, Musharraf has received a hero's welcome since arriving in the northern Indian city of Ajmer on Saturday to pray for peace at South Asia's most famous Sufi Muslim shrine.
"Man of the match: Musharraf" declared the front page headline in India's The Economic Times.
"Flexibility had to be shown by both sides, but this is a major departure ... it is an achievement for common ground, towards a solution and the original positions on both sides," said Ershad Mahmood, of Islamabad's Institute of Policy Studies.
"This is the first time... (common ground) has happened in history. So this is major flexibility being shown by both sides."
On Sunday, Musharraf met Kashmiri separatist leaders, who he says must be brought into any peace process for it to work. The All Parties Hurriyat (Freedom) Conference leaders are due to meet Singh for the first time soon, although no date has been set.
But on Monday, militants accused him of selling out.
"Musharraf has agreed to a sell out on Kashmir in return of trade, tourism and devil cultural ties with India," said a joint statement by four groups who have threatened the bus service.
"Once hero of Kargil, the general has knelt down before India," they said, referring to near war in Kashmir in 1999.
Tens of thousands of people, many of them civilians, have died in a 15-year rebellion by Islamic rebels against Indian rule in Kashmir and violence continues unabated, despite the new thaw.
South Asia's military giants have fought three wars since Britain partitioned its Indian empire in 1947, two over Kashmir. (Additional reporting by Tahir Ikram and Robert Birsel in ISLAMABAD)