NEW DELHI - Indian Prime Minister Manmohan Singh defended efforts to improve ties with Pakistan on Wednesday in a sign the government is moving toward resuming a stalled peace dialogue with Islamabad despite opposition pressure.

Singh made a spirited defense of a joint statement he signed with Pakistani counterpart Yusuf Raza Gilani this month agreeing to delink the issue of terrorism from a broader peace process halted by India after November's attack on Mumbai.

India broke off a five-year-long formal peace process after the attacks on Mumbai by Pakistan-based militants who India says must have been helped by Pakistani security agents.

Islamabad denies state agencies had any role in the attacks that killed 175 people.

Singh's move was slammed by opposition leaders as diluting India's stand linking a resumption of peace talks to Pakistan acting against the planners of the attack.

I sincerely believe it is our obligation to keep the channels of communication open (with Pakistan), Singh told parliament.

Unless we talk directly to Pakistan we will have to rely on a third party to do so... Unless you want to go to war with Pakistan, there is no way but to go step by step... Dialogue and engagement are the best way forward.

Singh's new Pakistan policy was viewed even within a section of his Congress party as risky in India where distrust of its neighbor runs deep and any concession is viewed with suspicion. Both countries are nuclear armed.

But some experts say Singh's move was not surprising given the strong election victory of his party in May which gave the government a freer hand to deal with Pakistan.

There is little doubt that the Congress (party) and the government are on the back foot due to opposition pressure, but they will go ahead with dialogue and if India wants peace in Pakistan, a dialogue is unavoidable, strategic affairs expert Amulya Ganguly told Reuters.

Pakistan wants India to return to peace talks without conditions. The United States also wants the two sides to return to a dialogue so that Pakistan can concentrate on fighting the Taliban and al Qaida militants on its western borders.

Singh had also drawn flak for agreeing to include in the joint statement a reference to the Pakistani province of Baluchistan, where Pakistan accuses India of fomenting an insurgency. New Delhi denies the charge. But he said India had nothing to hide on Baluchistan.

The UPA (United Progressive Alliance) government needs no lessons from the opposition on tackling terrorism, he said to the thumping of desks from ruling party lawmakers.

(Editing by Nick Macfie)