Pakistan and India have finalised a draft agreement, which would pave the way to restart a ferry service between them that was broken off 30 years ago, officials said yesterday.

The South Asian nuclear rivals have also conducted a successful trial run of a bus service linking Amritsar to Lahore yesterday.

The two countries agreed on a draft Saturday to revise a shipping protocol between them after three days of talks here, Anwer Shah, director general of Pakistani ports and shipping ministry told AFP.

The revised protocol would allow Pakistan and India to lift third country's cargo from each other's ports,

he said.

The protocol would be signed after completion of necessary formalities by the two governments, but he gave no specific date.

"With our agreement to delete contentious parts of the old document (1975 protocol) we have agreed to provide freedom of navigation to lift third country's cargo from each other ports," Shah said.

"Thus, we have successfully removed the final obstacle in the way of the Karachi-Mumbai ferry service," he said.

The service was broken off in 1975 with Pakistan saying bilateral trade was too thin and passenger numbers too low to make it viable.

"We have done at least 90 percent of work and now it is up to the

cabinets of the two countries to formally endorse it," Shah said.

"We pointed out difficulties to the Indian counterparts vis-a-vis Pakistani seafarers for joining their vessels from Indian ports that has been acknowledged by the Indian delegation," said Shah.

"It (the protocol) would benefit thousands of Pakistani seafarers," he said.

The latest move to increase people-to people ties and trade is part of a slow-moving peace process started in January 2004 between the South Asian rivals.

The two countries have also increased bus links and flights and opened their heavily militarised border in Kashmir after devastating October 8 earthquake that killed

more than 74,000 people.

Meanwhile, India and Pakistan yesterday conducted a successful trial run of a bus service linking Amritsar to Lahore as part of their cautious peace process.

The Indian bus, painted with the flags of both countries, left the Sikh holy town of Amritsar in Indian Punjab for Lahore in Pakistani Punjab 60 km to the west.

As the golden-coloured bus with Indian officials on board crossed the border point at Wagah, a Pakistani band greeted the vehicle, a witness said.

"I am so happy that I cannot explain it to you," bus driver Amreek Singh told NDTV 24/7 news television.

The bus later arrived in Lahore.