The Times of India, quoting Indian army sources, said there had been no further incidents between the armies of the two nuclear-armed neighbors across the LoC (Line of Control) where a cease-fire was put in place in 2003.
The calm came after the two sides agreed not to violate the cease-fire.
Trouble began about 10 days ago when a Pakistani soldier was killed allegedly by Indian troops during LoC shootings.
Later, India accused the Pakistani soldiers of crossing the LoC and killing two Indian soldiers whose bodies were beheaded and mutilated. Pakistan denied the allegations.
The Indian public, enraged over the alleged mutilation and beheading, and some leaders urged strong retaliation, escalating the situation and threatening to derail delicate peace talks.
Indian Prime Minister Manmohan Singh, known for his calm demeanor, said Tuesday "business as usual" with Pakistan was not an option.
"Those who are responsible will have to be brought to book ... I hope Pakistan realizes this," he said.
Pakistani Foreign Minister Hina Rabbani Khar, meanwhile, was quoted as saying India was "war-mongering," threatening the peace process
Pakistan's Express Tribune said LoC operations heads for each side agreed to de-escalate the situation although the Pakistan army lodged a strong protest with India over Tuesday's cease-fire violation, which claimed the life of a Pakistani soldier.
Peace talks between two sides began after relations plunged to their lowest level following the 2008 terror attacks in Mumbai by 10 gunmen from Pakistan that lasted three days and left 166 people, including foreigners, dead and more than 200 wounded.