NEW DELHI: India and Pakistan have agreed to resume formal peace talks that were broken off by New Delhi after the 2008 Mumbai attacks, Indian sources said on Thursday, a crucial step forward in improving ties that impact regional security.

The decision was made at this week’s talks between the two countries’ top foreign office officials in the Bhutanese capital of Thimphu.

Both sides have been under pressure from the United States to reduce tension because their rivalry spills over into Afghanistan and complicates efforts to bring peace there.

“The new talks are in effect the formal resumption of the composite dialogue,” a senior Indian government official involved in repairing ties with Pakistan told Reuters, referring to a 2004 peace initiative.

India suspended a 2004 peace process between the two sides after the Mumbai attacks, blaming Pakistan-based militants for the deaths of 166 people.