Pakistan accused India's air force of violating its airspace, drawing a swift denial from New Delhi, as Britain's visiting prime minister sought to defuse tensions.
Pakistan's statement that Indian jets made an "inadvertent" intrusion threatened to further harm ties between the nuclear-armed South Asian states, whose relations have plummeted in the wake of the Mumbai attacks which killed at least 170 people.
An Indian air force spokesman denied the allegation, saying "there has not been any airspace violation".
The row broke out as British leader Gordon Brown, who will visit Pakistan later, held talks with Indian Prime Minister Manmohan Singh on regional security after the assault on Mumbai.
Relations between India and Pakistan have deteriorated in the wake of the devastating siege on India's financial capital, which New Delhi has blamed on "elements" in Pakistan.
Pakistan's air force said Indian jets had Saturday flown over the Pakistani-administered part of Kashmir and the eastern city of Lahore, both places where the militant group Lashkar-e-Taiba which India blames for the attacks is active.
The government said it had confirmed the incident with India.
"We contacted the Indian air force and they said the violation was inadvertent. We don't want to escalate the situation," Information Minister Sherry Rehman said.