SRINAGAR (REUTERS) - Several dozen Chinese soldiers have set up a remote camp some 10 km inside territory claimed by India in the high altitude Himalayan desert of Ladakh, Indian police sources said, in a possible return to border tension between the Asian giants.

An Indian foreign ministry spokesman said the two countries were in touch with each other to resolve the row. The ill-defined border has fuelled 50 years of mistrust despite blossoming economic ties.

The Indian army set up its own temporary camp just 500 meters from the Chinese People's Liberation Army (PLA) soldiers after the incident on April 15, a senior police official stationed close to the border told Reuters.

"The PLA pitched tents inside Indian territory and established temporary posts there", the official said, who asked not to be named because of the sensitivity of the matter. He said two helicopters gave support to the Chinese as they set up the camp on the Indian side of the disputed border.

"On April 17, 5th Battalion of Ladakh Scouts was sent to the sector to take on the PLA challenge and they are also camping there now," the official said.

Another police officer in Srinagar, the capital of India's Jammu and Kashmir state, confirmed his colleague's version of the incident.

Responding to the reports of a Chinese incursion in Ladakh, the Indian foreign ministry acknowledged both sides were in touch through diplomatic channels established to diffuse border flare-ups.

"We are confident that the current incident will also be peacefully resolved on this basis," spokesman Syed Akbaruddin said.

He didn't give details.

India lost a short but bloody war with China in 1962, fought in Ladakh and the eastern state of Arunachal Pradesh.

Today India controls Arunachal Pradesh, while China administers a large area adjacent to Ladakh called Aksai Chin. Neither side is comfortable with the arrangement.

Small incursions are common across the Line of Actual Control (LAC), the de facto border that runs some 4,000 km across the Himalayas, but it is rare for either country to set up camp so deep within disputed territory.

The two countries have increased their military presence on each side of the border in recent years as their fast-growing economies permit more spending on defense of remote regions.

They hold frequent meetings to diffuse tensions, but high-level talks to resolve the dispute have not produced results.

The latest incident took place at Daulat Beg, where India established a landing strip during the 1962 war.

At 5,100 meters, the strip is one of the world's highest. It was reopened in 2008.

When asked, Rajesh Kalia, the spokesman for the Indian army's Northern Command, did not confirm or deny the incident.

"Due to the difference in perception of the LAC a few face offs take place in the eastern Ladakh sector. These are resolved amicably through existing mechanisms," he said.

China's foreign and defence ministries did not immediately respond to a request for comment.

Another senior Indian army officer, who asked not to be identified, confirmed there had been a standoff with the Chinese army in the Daulat Beg sector of Ladakh, but said that it had been resolved.

However, the police official stationed in the area said the two sides were still manning the temporary posts, despite a meeting this week between local Chinese and Indian commanders to seek a solution.

"The Indian army asked for flag meeting with the PLA to sort out the intrusion, and on April 18, it was held in Chushul," the police official said. The official said he was not present at the meeting but came to know about it from the army.

"The Indian army commander raised the issue of the intrusion with their Chinese counterpart. The Chinese Army commander reportedly told his Indian counterpart that it is their own territory where they are camping. The meeting ended in deadlock," the official said.

Kashmir police sent a detailed report on the situation to the Home Ministry in Delhi on Friday, the official in Srinagar said.