THIMPHU, Bhutan (Reuters) – The prime ministers of India and Pakistan held “very good talks” yesterday and asked their officials to take steps as soon as possible to normalize relations, officials said, signaling an unexpected thaw.

Relations between the nuclear-armed rivals went into a diplomatic freeze after India blamed Pakistan-based militants for the Mumbai attacks in November 2008. That renewed tension between the two and a proxy war for influence had been seen as hampering US led efforts to bring peace to Afghanistan.

Indian Prime Minister Manmohan Singh and his Pakistani counterpart Yousuf Raza Gilani met while in Bhutan for a summit of South Asian leaders, their first meeting in nine months.

“The idea was on renewal of dialogue; to understand the state of affairs,” Indian Foreign Secretary Nirupama Rao told a news conference after the meeting.

“There was a lot of soul-searching here. The searchlight is on the future, not on the past.”

She said the two prime ministers had asked their foreign ministers and foreign secretaries to meet “as soon as possible to work out the modalities for restoring trust” and taking the dialogue forward.

Pakistan Foreign Minister Shah Mehmood Qureshi said the climate of talks had changed for the better and the two leaders had asked their officials to meet as frequently as possible.

“I don’t think either side was expecting such a positive turn in dialogue,” Qureshi told reporters. “It was a step in the right direction and it was in the right spirit.”

Both sides have been tentative about meeting. There are differences over the nature of talks: Pakistan wants India to restart the broader peace process it broke off after the Mumbai attack, while India wants to go slow until Islamabad acts against the planners of that carnage.

But yesterday‘s meeting signalled New Delhi was willing to shift from its well-entrenched position on resuming talks with Rao saying the focus was how to carry the dialogue forward to resolve “all issues of concern.”

“I do not think we have to get stuck with nomenclature. Both sides agreed dialogue was the only way forward,” she said when asked if these talks were not in effect resumption of the broader peace dialogue India suspended after the Mumbai attacks.

Qureshi said the present round of talks were unconditional and all issues between the two countries were on the table.

“The two prime ministers have agreed to resume a dialogue process that remained suspended for so many months,” he said, without giving further details.

While yesterday‘s meeting showed that both sides may be willing to focus on improving ties, there are also fears that their strong domestic compulsions may stop them from making the concessions needed for a breakthrough.

“This sounds good for everyone, but translating that into practice is not going to be easy because both sides are playing to the public gallery both at home and internationally,” said Brahma Chellaney, a strategic affairs expert at the Centre for Policy Research in New Delhi.

In Washington, a senior State Department official told Congress that easing India-Pakistan tensions was a “very high priority” for US President Barack Obama but added that US support for the process would be discreet.

“It’s very clear that our support is best done in a quiet fashion in just encouraging the process and offering the support to the parties that we can,” said Paul Jones, deputy special representative for Afghanistan and Pakistan.

Re-engaging Islamabad is a politically fraught move for New Delhi, given strong Indian sensibilities about Pakistan, but a nudge from Washington and dwindling diplomatic options stemming from no talks saw India reaching out.