(Adds Indian minister's comments)

* Pakistan urges India to stand down troops, air bases

* India rejects suggestion it is escalating tension

* India says will give Pakistan more proof on Mumbai attacks

By Kamran Haider

ISLAMABAD, Dec 30 (Reuters) - Pakistan urged India on Tuesday to reduce tension by deactivating its forward air bases and standing down troops, but New Delhi angrily rejected suggestions it was aggravating tension with its nuclear-armed rival.

A near-daily, frenzied exchange of words has added to bilateral tensions that touched the boiling point after last month's attacks in Mumbai in which 179 people were killed. India says the attackers were trained in Pakistan.

"I believe if India deactivates its forward air bases and similarly, relocates its troops to peacetime positions, that will be a positive step," Pakistani Foreign Minister Shah Mehmood Qureshi said in a televised address.

"I believe by this, the existing tension in the region will be reduced," he said, calling for resumption of a dialogue suspended by India after the Mumbai attacks.

Pakistan has condemned the Mumbai attacks and has denied any role, blaming "non-state actors".

But Indian Foreign Minister Pranab Mukherjee refuted suggestions India was mobilising its military and aggravating an already tense atmosphere.

"We have not escalated any tension, so where is the question of our de-escalation?" he told reporters, referring to Qureshi's suggestions on reducing tensions between the two neighbours.

Mukherjee told PTI news agency any military movement now was only part of routine annual winter exercises. India had earlier said its troops were on standby, although it said it had made no new deployments since the Mumbai attacks.

"There is no no question of mobilisation or escalation of tension," PTI quoted Mukherjee as saying.

As tension rose after the Mumbai attacks Pakistan cancelled army leave and moved a "limited number" of soldiers off the Afghan border "for defensive measures", military officials said.

The military has officially denied any build-up of forces on the Indian border, though a security official said some troops had been moved there.

"We have not done anything which can escalate the tension between India and Pakistan because from day one I am saying, this is not an India-Pakistan issue," Mukherjee told reporters.

"This is an attack perpetrated by elements emanating from the land of Pakistan and Pakistan government would take action.

"We are repeatedly saying that, yes, we will give you evidences, as earlier we have given you, but please act on it."

India, the United States and Britain have blamed the attacks on Pakistan-based Islamist group Lashkar-e-Taiba (LeT), set up by Pakistani security agencies in the late 1980s to fight Indian rule in the disputed Kashmir region.

The group was banned in Pakistan in 2002.

India is demanding Pakistan dismantle what it calls the infrastructure of terrorism and has put a "pause" on a four-year peace process that had brought better ties between the old rivals.

"It's our point of view that pressure and coercion do not improve relations between friends but make them complicated," Qureshi said.

"That will not benefit the two countries but those forces which tried to create tension and unease by this incident and put the peace of this region at stake." (Reporting by Krittivas Mukherjee; Writing by Robert Birsel and Krittivas Mukherjee; Editing by Sugita Katyal)

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