India and Pakistan agreed to resume formal peace talks for the first time since New Delhi broke off negotiations after the 2008 attacks in Mumbai.

The two sides agreed that the talks will be "on all issues," and include Kashmir, counter-terrorism, humanitarian issues and peace and security.

The talks are expected to start by July.

The announcement on Thursday comes after the Indian foreign secretary, Nirupama Rao, met her Pakistani counterpart, Salman Bashir, in the Bhutanese capital Thimphu on the sidelines of a South Asian Association for Regional Cooperation (SAARC) meeting on Sunday.

"We never turned back on dialogue with Pakistan. [The] door for talks was never shut even after Mumbai attacks. Our prime minister, foreign minister met Pakistani leaders on a number of occasions," Rao told Al Jazeera.

The Pakistani prime minister, Yousuf Raza Gilani, praised his Indian counterpart, Manmohan Singh, for the "opening of a new chapter in the relations between the two countries."

The United States has also welcomed the talks between the nuclear-armed rivals, with White House Press Secretary Robert Gibbs saying he hopes the talks will be productive.

New Delhi ended talks with Islamabad after Pakistani gunmen laid siege to Mumbai for three days and killed at least 166 people. India demands that Pakistan do more to take action against those in its country involved in the terrorist act.

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