The leaders of 16 Islamic militant groups vowed today to fight to the "last drop of our blood" inside India's portion of the disputed territory of Kashmir, strongly denouncing Pakistani Prime Minister Nawaz Sharif for agreeing to ask the armed guerrillas to withdraw and dealing a blow to the government's hopes for ending its border war with India.

At a lengthy news conference, the normally reclusive militant leaders said they still control 11 square miles of mountainous territory on the Indian side of the border dividing Kashmir and that they intend to remain there until September, when winter sets in. They denied receiving any direct support from the Pakistani army, as India has repeatedly claimed, and they said they had inflicted more than 700 casualties on Indian forces over the past six weeks.

"We will not even think of withdrawing. . . . We will continue to the last drop of our blood, until every holy inch of Kashmir has been liberated from Indian occupation," said Syed Salahuddin, leader of the United Jihad Council and chief spokesman for the rebel groups. "We will not allow an international conspiracy to hijack our movement."

Sharif, who is due back here Thursday after hastily arranged visits to Washington and London, issued a joint statement with President Clinton over the weekend in which he essentially agreed to try to pull back the Pakistani-supported forces who infiltrated the remote highlands of Indian Kashmir in April and have been battling Indian troops, artillery and warplanes there since May.

India and Pakistan have both claimed Kashmir as their own for half a century and have fought two border wars over the scenic Himalayan region. For the last decade, moreover, Kashmiri militants supported by Pakistan have waged a low-intensity guerrilla war inside Indian Kashmir, a heavily militarized region patrolled by several hundred thousand Indian troops.

Sharif, who pledged this week to appeal to the rebels to withdraw, has come under heavy pressure from the United States and other foreign powers to call off the cross-border adventure, in part because of international concern that the conflict could escalate into a nuclear war. Both India and Pakistan successfully tested nuclear weapons last year.

But in their unified display of defiance, the militants--known here as mujaheddin, or holy warriors--made clear that they feel betrayed by Sharif and have no intention of honoring his request. It has been widely reported that the groups are closely affiliated with Pakistani intelligence services and directly supported by Pakistani military forces; if so, their statements could signify an indirect challenge to Sharif by the country's security establishment.

"This will obviously make it much more difficult for Sharif to make this Washington agreement domestically acceptable," said Rifaat Hussain, a political analyst at Quaid-I-Azam University. He noted that some major Islamic groups and military hard-liners have sharply criticized Sharif's agreement with Clinton, and that many Pakistanis feel their prime minister looked weak and undignified in seeking Washington's help. Pakistan's deeply indebted economy is dependent on aid and loans from the West.

Aides to Sharif today attempted to play down the significance of the militants' declaration. They also characterized Sharif's mission to Washington as a resounding success because it succeeded in involving U.S. officials as mediators in the Kashmir issue, something India has tried hard to avoid.

"We didn't start this uprising and we can't stop it," Mushahid Hussain, Pakistan's minister of information, said in an interview. "This is a legitimate, indigenous, independent movement of Kashmiris over which we have only limited leverage. We can apply friendly persuasion, but we can't switch them on and off at will."

Asked about India's repeated contention that Pakistani troops are participating in the incursion, the information minister said the allegations were "lies and fabrications."

American officials have said, however, that they agree with India's claims that Pakistani troops are involved in the operation, and analysts in both India and Pakistan have suggested that the militant groups would not be able to launch or sustain such an ambitious operation without help from the military.

In their comments today, the militant leaders said about 1,000 of their forces, whom they described as mostly Kashmiri fighters along with a few Afghans, are well entrenched inside Indian Kashmir. They denied India's claim that its troops have achieved a series of important military victories over the past two weeks. They said that more than 700 Indian troops have been killed and that only 130 of their fighters have died; figures released by Indian authorities suggest the reverse.

CAPTION: Rebel spokesman Syed Salahuddin denounces Sharif-Clinton agreement.