TENSIONS between India and Pakistan, the rival nuclear powers, are on a knife edge this weekend as Islamabad refuses to admit that the Mumbai terrorist outrage was planned and carried out by Pakistanis.

Zarar Shah, a leading commander of the Lashkar-e-Taiba group, has admitted under interrogation in Pakistan that he advised the terrorists by telephone as the attack unfolded.

Controllers in Pakistan watched live television and warned the gunmen of the arrival of Indian commandos, according to evidence amassed by the FBI and handed over to the Pakistani government.

The American agency had decoded Skype calls over the internet that were made between the gunmen in the two five-star hotels and a Jewish hostel in Mumbai with their Lashkar controllers in Pakistan, identified as Shah, Abu Hamza and Abu Qafa.

Talking in colloquial Punjabi, the controllers repeatedly told the attackers to “Aag lagao” (“Light the fire”), which has been interpreted in India as a way of maximising casualties. During the conversation, the men were also instructed to kill all the Israelis who were held captive in the Jewish hostel, but to spare all the Muslims.

Shah revealed that the 10 assailants were trained in Pakistani Kashmir and then travelled by boat from Karachi to Mumbai. He implicated several other Lashkar men.

“He is singing,” a Pakistani security official told The Wall Street Journal. Indian police say his confession backs what they have been told under interrogation by Ajmal Amir Kasab, the one surviving gunman.

Islamabad rejected the alleged FBI evidence and dismissed India’s claim of close ties between Lashkar and the Pakistan military’s Inter-Services Intelligence Agency.

Manmohan Singh, India’s prime minister, yesterday demanded that Pakistan hand over the perpetrators of the Mumbai attacks.

As Indian frustration mounts, air bases and troops along the Pakistani border remain on stand-by. Pakistan has redeployed troops from the Afghan border to its Indian frontier.

Arackaparambil Kurian Antony, India’s defence minister, said last week Pakistan had given no indication that it would clamp down on senior jihadis. India claims they were the masterminds behind the November 26 attacks that left 171 dead, including Andreas Liveras, the British millionaire.

“I do not think there is any noticeable change in the attitude of Pakistan,” Antony said. “Statements are not important. Actions are important.”

Antony said Pakistan had no right to criticise Indian military movements along the border when terrorists remained active in Pakistan. “More than 30 terrorist outfits are still operating in Pakistan,” he said.

Shah Mehmood Qureshi, the Pakistani foreign minister, claimed he had received information that India was “seriously contemplating surgical strikes” against his country.

“Pakistan took steps accordingly and sent out a loud and clear message that this would escalate the situation and increase tensions. Pakistan does not want war but, if war is imposed on us, we know how to defend ourselves,” he said.

However, India and Pakistan did exchange lists of their nuclear installations in accordance with their long-standing agreement, a move hailed as a step in the right direction.

India says there is no doubt Lashkar, set up by Pakistani security agencies in the 1980s to fight Indian rule in disputed Kashmir, is behind the attacks.

Jamaat-ud-Dawa, a front organisation for Lashkar, was banned by the United Nations security council last month at the request of India. However, there are fears in India that the organisation is poised to rename itself Tehreek-e-Hurmat-e-Rasool (Movement for defending the honour of God) so as to continue its operations.

Abdullah Ghaznavi, Lashkar’s spokesman, said: “India has failed to furnish any evidence of Lashkar-e-Taiba’s involvement in the Mumbai attacks and America is now trying to help it out.”

Dr Ashwani Kumar, a political scientist at the Tata Institute of Social Sciences in Mumbai and the London School of Economics, said: “India is being seen by the international community as a responsible power with democratic restraint and has shown a lot of maturity compared with the US response to 9/11.

“However, the fact is that the country has failed miserably in its bilateral response.”

Meanwhile, the bodies of the nine terrorists lie in a Mumbai mortuary, unclaimed by either Pakistani or Indian Muslims.

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