The US said today it saw "encouraging" signs that India and Pakistan want to avoid war.
In an interview with the BBC, Secretary of State Colin Powell said the US might send an envoy to promote a diplomatic solution between the two nuclear powers.
But he also said that Pakistani President Pervez Musharraf must do more to crack down on the extremists who started the crisis by attacking India.
"There are some encouraging signs out there but I don't want to overplay this. It is still a very dangerous situation," Mr Powell said.
"Both leaders (Gen Musharraf and Indian Prime Minister Atal Behari Vajpayee) have said they are looking a political and diplomatic solution and so far that quest continues and there has been some success.
"We are far away from a solution but we are trying to reach that solution," he added.
Asked if the US planned to send an envoy to try to reduce tensions, Mr Powell said the Bush administration would take a hard look at the idea at the beginning of next week, after Mr Musharraf and Mr Vajpayee come home from a regional economic summit in the Nepalese capital Kathmandu.
The US would like the two leaders to meet in Kathmandu but an Indian spokeswoman said today India did not think the atmosphere was conducive for talks.