NEW DELHI (Reuters) - India called off on Monday peace talks with Pakistan, giving a jolt to renewed diplomatic efforts between the two nuclear-armed neighbors and adding to the troubles of Pakistan's beleaguered government.

The move came nearly three months after Pakistani Prime Minister Nawaz Sharif attended the inauguration of Indian Prime Minister Narendra Modi, the pair shaking hands in a gesture that had raised hopes of warmer ties between the two nations.

India said it would not attend talks involving the foreign secretaries of the two countries, which had been set to take place on Aug. 25 in Islamabad, because of plans by Pakistan to consult Kashmiri separatists ahead of the meeting.

India's foreign ministry spokesman Syed Akbaruddin called the invite an "unacceptable" attempt to "interfere" in domestic affairs, adding that the talks had been "canceled".

Pakistan deplored India's move, calling it a "setback" in efforts to promote good neighborly relations.

The Himalayan region of Kashmir has been a bone of contention between India and Pakistan since both gained independence in 1947.

The two nations have fought three wars and came close to a fourth war in 2001 and there have been regular clashes on the heavily militarized Line of Control that divides Indian- and Pakistan-controlled Kashmir.

In a statement, Akbaruddin said Pakistan's proposed meetings with Kashmiri separatists "undermines the constructive engagement initiated" by India's new administration.

He added: "...under the present circumstances, it is felt that no useful purpose will be served by the Indian Foreign Secretary going to Islamabad next week."

Pakistan's foreign affairs ministry, however, defended the decision to consult the Kashmiri leaders, saying it was a "longstanding practice" prior to talks between the two nations to "facilitate meaningful discussions on the issue of Kashmir".


RIGHTS ABUSES

India has for years complained that Pakistan backs separatist militants who slip in from Pakistani-controlled Kashmir to stage attacks.

Pakistan says it only gives political support to the Muslim people of Kashmir, who it says face human rights abuses at the hands of Indian troops. India denies that.

The recent resumption of dialogue had offered the two countries an opportunity to find lasting peace and boost trade.

Modi, a Hindu nationalist leader, was elected by a landslide on promises to restore India's economic and military prowess and meet the security challenge posed by a rising China and long-running tension with Pakistan.

Yet he surprised many observers by inviting South Asian leaders - including Sharif - to his inauguration in a bid to bolster neglected regional ties.

However, the new-found warmth in the ties between the two nations took a hit last week when Modi accused Pakistan of waging a "proxy war" by sending militants to attack India.

Since then, a spurt in violations of the ceasefire along the Line of Control, as well as on the international border, has only further soured relations.

India's decision to cancel the talks represents a blow to Sharif, who is trying to stave off a bid from opposition leader Imran Khan to unseat him.

Sharif has made improving relations with India a cornerstone of his policy, much to the chagrin of Pakistan's powerful military and security establishment which appears less keen to do so.


(Reporting by Rajesh Kumar Singh; editing by Crispian Balmer)