NEW DELHI, India - India and Pakistan agreed Friday to restore full diplomatic ties and to hold their first talks in almost two years aimed at ending 50 years of war and acrimony. 

The peace overtures involving the nuclear-armed neighbors come ahead of a visit to the region next week by U.S. Deputy Secretary of State Richard Armitage. Secretary of State Colin Powell called the renewed contacts "very, very promising." 

Prime Minister Atal Bihari Vajpayee, 78 and ailing, indicated he would like to leave a legacy of peace between India and Pakistan. 

"This round of talks will be decisive," he said in a speech to India's parliament. "And at least for my life, these will be the last." 

He said he will send an ambassador to Islamabad and restore civil aviation links that were cut last year. Pakistan's foreign minister, Khursheed Kasuri, said Pakistan would also upgrade diplomatic relations. 

"We welcome Prime Minister Vajpayee's announcement in Indian Parliament today, including the one relating to the appointment of a high commissioner," Kasuri said in a statement. "Pakistan wants high commissioner (ambassador) level relations with India." 

He said the official reply to Vajpayee's offer of dialogue would come from Pakistan's Prime Minister Zafarullah Khan Jamali. He wouldn't say when Jamali would give the reply or what it would contain. 

Jamali made a similar overture in a phone call Monday to the Indian leader, the first such high-level contact in almost two years. 

Pakistan's Information Minister Sheikh Rashid Ahmed said the talks would be between Vajpayee and Jamali, not with President Gen. Pervez Musharraf, with whom Vajpayee has had acerbic encounters. 

"Soon both prime ministers are going to see each other," Ahmed said in a live interview with New Delhi Television News. 

The two countries went on war footing last year after India blamed Pakistan for an attack by Islamic militants on the Indian Parliament in December 2001. Pakistan denied involvement. Tensions eased after intense diplomacy by the United States and Britain. 

Pakistan and India have been feuding over the divided Kashmir region for decades. They have fought two wars over its ownership. The world community is pressing for peace fearing another confrontation could escalate into a nuclear exchange. 

Last week, Vajpayee conditionally offered talks with Pakistan on the disputed Himalayan region of Kashmir and other issues. Musharraf voiced some reservations but called the offer a sign of improvement. 

"We are committed to the improvement of relations with Pakistan and we are willing to grasp every opportunity for doing so," Vajpayee told Indian lawmakers on Friday. 

A dispute over divided Kashmir is the main source of the friction. Both countries claim Kashmir in its entirety and have fought two wars over the region since their independence from Britain in 1947. 

Vajpayee did not directly answer Parliament members' questions about whether he was changing India's policy of not holding talks with Pakistan until Islamic militants stop crossing the frontier to wage attacks in the Indian-controlled portion of Kashmir and elsewhere in the country. 

India accuses Pakistan of aiding the militants. Pakistan says it only gives the fighters ideological support. 

"This is a new beginning," he said. "We don't want to forget the past, but we don't want to remain slaves of the past." 

Vajpayee said he was trying for "a third time" to make permanent peace with Pakistan. 

In 1999, he traveled to Lahore to meet with then-Pakistani Prime Minister Nawaz Sharif, but a few months later the two nations were involved in what India calls the Kargil War in the mountains of Kashmir. Vajpayee invited Musharraf to talks in the Taj Mahal city of Agra in July 2001. There were no agreements and in December came the Parliament attack. 

The two countries went on war alert, deployed thousands of troops to their frontiers, withdrew their ambassadors and severed air and ground transportation links. 

Analysts say that Vajpayee - unlike hawks within his Cabinet - does not believe that the constant threat of terrorism or war with Pakistan will win votes in India's national elections next year. 

His announcement also puts India in a good position for receiving Armitage. India has traditionally preferred to portray itself as being reasonable in the dispute with Pakistan, a key U.S. ally in the war on international terrorism. 

"Terrorism is continuing. Anything can happen anytime. So should I not have extended the hand of friendship?" Vajpayee said. "We want to give another chance to peace, and with self-respect, not with weakness." 

Both Indian and Pakistani officials suggested that Armitage's impending visit gave an impetus to the rapprochement as both governments want to present a sympathetic image to the world's superpower. 

"I hope that these first steps are just that - first steps, on the way to finding a way for the difficulties that existed between these two nations," Powell said while traveling in Albania.