KARACHI, PAKISTAN -- Six months after openly threatening war over the disputed state of Kashmir, India and Pakistan have cooled their martial rhetoric while stepping up covert military operations in what officials on both sides call a "proxy war."

The covert war is being conducted according to unspoken but longstanding rules under which each country tries to destabilize the other by exploiting ethnic tensions and providing support to separatist insurgents across the border, according to Indian and Pakistani officials.

The support includes military training, arms supplies and political activities aimed at furthering the aims of separatists, but it stops short of overt military involvement that might provoke a formal armed conflict.

Moslem guerrillas fighting the Indian government in Kashmir acknowledge that they are receiving arms and training from Pakistan, as well as advice from Pakistan's Inter-Services Intelligence agency (ISI). The level of Pakistani assistance has been substantial and steady since earlier this year, according to the guerrillas.

In the Indian state of Punjab, radical Sikh separatists continue to wreak havoc with weapons obtained in Pakistan. But the level of assistance to the guerrillas from Pakistan's government appears to be lower than in Kashmir. Indian intelligence officials charge that Pakistan is providing military training and advice to the Sikh guerrillas, but some guerrillas say that they conduct their own training within India and only cross into Pakistan to purchase weapons.

Pakistani military officers charge that India is fighting back by renewing covert operations in Sind, Pakistan's ethnically troubled southern province. Pakistan last month expelled four diplomats from the Indian consulate in Karachi, accusing them of being agents of the Research and Analysis Wing, India's main intelligence agency, according to Pakistani military sources.

A senior Pakistani military officer said the alleged agents had been caught traveling without permission in rural Sind, where they allegedly met with radical Sindi nationalists and organized-crime figures and offered to provide weapons and other assistance. He also said ISI had obtained a memorandum from the Indian intelligence agency's New Delhi headquarters asking the Indian consulate in Karachi to establish about a dozen "safe houses" in Sind from which covert operations could be mounted.

India and Pakistan for years have accused each other of stirring up trouble through covert operations, but the level of activity across the border appears to have increased since last spring, when tensions over the insurgency in Kashmir prompted both sides to rush troops and weapons systems to the border amid shrill threats of war.

Since then, the military tensions have eased, dampened by superpower lobbying, faltering economies and domestic political instability. The Persian Gulf crisis also helped to reduce war fever as the swift international condemnation of Iraq reminded each government that any armed incursion could bring costly international isolation.

In the past month, both India and Pakistan have changed their governments, with rightist Nawaz Sharif replacing Benazir Bhutto as prime minister in Islamabad and socialist Chandra Shekhar taking over from V.P. Singh in New Delhi.

Shekhar and Sharif met for the first time in November at a regional conference in the Maldives. They agreed to continue ministerial talks aimed at enacting confidence-building measures to reduce military tensions along the border, but they achieved no significant breakthroughs.

Military and intelligence officials and defense analysts in both countries say they expect the proxy war to continue at relatively high levels for an indefinite period.

"Patronage of insurgency by Indians and Pakistanis is a way of keeping alive their hostility because they really don't know what to do with it," said Subir Bhowmik, an Indian intelligence specialist and author of a forthcoming book on covert war in south Asia. "They don't want to carry it to a full-scale conflict right now because it would be too costly. It's a way to keep their hostility alive until they are ready to achieve a major strategic goal."

The obvious danger is that with emotions in both countries still running high and rival armies poised face to face in a state of readiness, an unexpectedly violent attack by a separatist group supported from across the border might provoke a sudden military escalation.

U.S. officials are particularly worried about reports that Kashmiri insurgents in India have obtained U.S.-made Stinger antiaircraft missiles that were originally supplied to Pakistan for use by Moslem rebels in Afghanistan. U.S. officials say the Kashmiri guerrillas do possess Stingers, although no journalist or diplomat traveling in the valley has yet reported seeing one, and none has been used.

There are widespread fears that all-out war could erupt between Pakistan and India because of actions by their proxies. And because both India and Pakistan are believed to have developed crude nuclear bombs, the potential for catastrophe is enormous.