(Recasts lede, adds details of jirga declaration)

By Sayed Salahuddin

KABUL, Aug 12 (Reuters) - Pakistan's president acknowledged on Sunday Afghan militants were operating from Pakistani soil, as he and his Afghan counterpart vowed joint efforts to fight Taliban and al Qaeda.

The two neighbours have more often traded barbed accusations than worked together to fight the threat from the Islamist guerrillas -- and Washington fears their dispute has helped militants hiding in the rugged border region.

A four-day council, or jirga, of Afghan and Pakistani politicians and tribal elders, drawing to a close in Kabul on Sunday, was agreed in Washington last year as a way to forge cooperation between the two sides.

"The joint peace jirga strongly recognises the fact that terrorism is a common threat to both countries and the war on terror should continue to be an integral part of the national policies and security strategies of both countries," said a declaration agreed by some 700 jirga delegates.

"There is no other option for both countries other than peace and unity, trust and cooperation," Pakistani President Pervez Musharraf told the closing session of the jirga. "There is no justification for resorting to terrorism."

Afghan officials have frequently accused Pakistan of harbouring Taliban and al Qaeda fighters to weaken its neighbour.

Pakistan denies the charge, but Musharraf acknowledged militants were operating from Pakistani tribal areas along the Afghan border which are largely outside government control.

"There is no doubt Afghan militants are supported from Pakistan soil. The problem that you have in your region is because support is provided from our side," he said.

"NO SANCTUARY"

Jirga delegates unanimously declared "an extended, tireless and persistent campaign against terrorism" and pledged the "governments and people of Afghanistan and Pakistan would not allow sanctuaries or training centres for terrorists in their respective countries".

Musharraf pulled out of a commitment to attend the opening of the four-day jirga on Thursday, citing engagements at home.

His appearance at the end of the conference will have gone a long way to make up for his original failure to show up. His absence had been seen as a blow to a meeting already hit by a boycott by some Pakistani tribal elders.

"It is a very happy event that the jirga between two countries was convened," Afghan President Hamid Karzai said in a short speech. "It is ending with good results, achievements and a message for both countries."

The two countries agreed to set up a smaller jirga of 25 members from each side to hold regular meetings to ensure the decisions are carried through and organise a second large meeting in Pakistan in the future.

They also agreed to cooperate on economic and social projects aimed at undercutting support for the radical Islamist groups seeking to overthrow the governments of both countries.

The fact that the jirga went off without any major dispute between delegates and that the two sides agreed to work together in the future will be regarded as a success in itself.

The jirga is seen as a first step towards a unified approach to combating militants who threaten security in both countries. The second jirga in Pakistan may yield firmer results.

A jirga is a traditional meeting among the Pashtun tribes that live on both sides of the border, where elders use consensus to try to peacefully settle disputes.

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