"Operations in Hill Kaka are over but we think some 250 militants survived and are now locally dispersed," a top defence source said in a rare admission.

India launched the operation on April 21 in the rugged jungles of the frontier Surankot district, killing 62 rebels and seizing mounds of weaponry.

During the combat, the army claimed to have destroyed a total of 94 militant hideouts, including concrete bunkers and an underground tunnel large enough to house up to 40 combatants.

They said rebels had set up camps over a four-year period in the area.

Other sources said army reinforcements were being sent to stage a new blitz on the Islamic militants, and that helipads were being built in the region to speed up the induction of troops into Surankot, some 18 kilometres (11 miles) from Pakistan's borders.

The official rejected suggestions that a majority of the Surankot militants survived because the army lost the element of surprise during the initial commando-style assault, backed by helicopter gunships, on Hill Kaka ridge.

"These are local militants working under orders from Pakistan-sponsored organisations," he said, ruling out the involvement of rebels from across the border.

The Indian army had earlier claimed that 80 percent of the militants killed were from Pakistan.

India accuses Pakistan of arming and training the guerrillas in Kashmir. Islamabad denies the allegations but openly offers moral and diplomatic support to what it calls the Kashmiris' rightful struggle for self-rule.

More than 38,000 people have died in separatist-linked violence in the Indian zone of the Himalayan territory, the cause of two of the three wars between the two South Asian nuclear enemies since 1947.

The source said despite the latest round of peace initiatives by India and Pakistan, which began on April 18, the army will not ease pressure on the Surankot militants, whom he described as "terrorists on the run."

"The operations will continue as long as it takes," he said, adding the raids, now backed by some 10,000 soldiers, had opened a chapter in India's decade-long attempt to snuff out insurgency from the Muslim-majority region.

"The Surankot operation is part of our overall counter-insurgency operation to neutralise militancy in Kashmir and hence it does not matter whether 35,000 or 40,000 soldiers are deployed or re-deployed," the official said.

"It is a huge task. We have to get the shepherds out of our way and compensate other civilians in the area. Hence it is wrong to equate this operation with Kargil," the source argued.

India and Pakistan came dangerously close to their fourth war in 1999 when India launched a full-scale military assault to dislodge Pakistan-backed forces from Kashmir's strategic peaks of Kargil.

Some 1,000 combatants on both sides died in combat, which was then blamed on the army's poor intelligence services to monitor the intrusion well in advance.

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