SRINAGAR (India) - MILITANT violence in Kashmir has fallen to an all time low, Indian police said on Friday, while noting that more than 800 Islamist militants still operated in the state.

The violence that has wracked Kashmir for nearly 20 years started to decline after India and Pakistan, which have rival claims to the disputed region, launched a peace process in January 2004.

The number of violent incidents in 2008 fell by about 40 percent to 700 compared with last year's figure of 1,090, Indian Kashmir police chief Kuldeep Khuda said in a statement.

Mr Khuda described the decline as 'phenomenal'.

The peace process has been frozen since last month's attacks in Mumbai, which New Delhi blamed on the Lashkar-e-Taiba - a Pakistan-based militant outfit fighting Indian rule in Kashmir.

Mr Khuda said more than 800 militants were still active in Kashmir, including 200 'foreigners' - a reference to those of Pakistani, Arab and Afghan origin.

'Some of them are even members of Lashkar-e-Taiba,' he said.

Last year, police estimated the number of active militants at 1,500.

Pakistan denies Indian allegations that it arms and funds the insurgents.

The police statement said Indian troops shot dead 350 militants this year, including 102 'top ranking commanders.'

Meanwhile, police used teargas and batons on Friday to disperse hundreds of protesters in the Kashmiri summer capital Srinagar.

Protesters emerged from the region's main mosque after Friday prayers and chanted 'we want freedom' and 'Allah is great.' Police used force and prevented them from marching towards the main commerical hub.

Police said that in the ensuing clashes five protesters and four policemen were injured.

Kashmir witnessed some of the biggest pro-independence demonstrations this summer which were met with a stiff crackdown by Indian security forces leaving 50 Muslim protesters dead. -- AFP