The comments appeared to signal an abrupt shift in India-Pakistan relations, which had warmed in recent years, and came as Indian authorities named a third suspect in Tuesday's train bombings that killed 200 people and injured 700.
Prime Minister Manmohan Singh told a news conference that the bombers were "supported by elements across the border," a reference to Pakistan.
"If the acts of terrorism are not controlled it is exceedingly difficult for any government to carry forward what may be called the normalization and the peace process," he said.
In an immediate fallout, scheduled talks between the foreign secretaries of the two countries on July 20 appeared to have been scuttled. The talks were to review the progress of the third round of their dialogue process.
Press Trust of India news agency quoted "official sources," a euphemism for top government officials, as saying that there was little possibility of the talks taking place in the wake of the Bombay tragedy.
In Islamabad, Pakistani Foreign Ministry spokeswoman Tasnim Aslam said Singh's accusations were "unsubstantiated and we have already rejected them."
She said the peace process was in the interest of everybody in the region "and that is why we believe that the peace process must be continued and carried forward."
Earlier Friday, Bombay Police Commissioner A.N. Roy said a man known only as Rahil was the third person being sought in connection with the blasts. The photos ofwere released Thursday. The nationalities of the three men have not been given.
Investigators are casting a wide net in their hunt for the assailants, scrutinizing a Pakistan-based Islamic militant network, the Lashkar-e-Tayyaba, along with smaller homegrown groups.
An Indian Home Ministry official said that among the leads being followed by investigators was the possible involvement of the outlawed Students Islamic Movement of India, which may have been aided by Pakistan's Inter-Services Intelligence agency.
The investigation also spread to neighboring Nepal where police said Friday they had arrested two Pakistanis in connection with the seizure of RDX explosives in the country's capital, Katmandu, in 2001. They said the two men are also being investigated for links to the Bombay blasts, CBS News' Ranjan Gupta reports.
In Bombay, during a visit to meet with the bombing victims, a somber Prime Minister Singh said Pakistan had assured India two years ago that its territory "would not be used to promote, encourage, aid and abet terrorism."
"That assurance has to be fulfilled before the peace process and other processes progress," he said, flanked by his interior minister.
Pakistan and India have fought three wars since the partition of the Indian subcontinent in 1947, two of them over the Himalayan region of Kashmir, which is split between the two countries but claimed by both in its entirety.
Investigators are certain, Singh said, that terror cells are operating in Bombay and many other parts of India.
"We are also certain that these terror modules are instigated, inspired and supported by elements across the border, without which they cannot act with such devastating effect. They clearly want to destroy our growing economic strength, to destroy our unity and provoke communal incidents," he said.
Singh, however, did not say what sort of support India believes terrorists receive from Pakistan, whether it is the moral support that Islamabad has long acknowledged giving Kashmiri separatists or the technical assistance, training and funding that many here believe Pakistan provides to an array of militant groups.
Pakistan denies stoking terror in India or fanning militancy in Kashmir.
The Indian Express newspaper said in an editorial that India must rethink the wisdom of dealing with Pakistan President Pervez Musharraf.
"He has failed to keep his word on ending cross-border terrorism. So India must ask itself whether he is any longer a credible interlocutor."
Press Trust of India on Friday reported that forensic tests from the wrecked trains were pointing toward the use of lower-grade industrial explosives, such as dynamite, or even simple chemical explosives, like ammonium nitrate, and not RDX as previously believed.
PTI said the use of such common explosives would indicate smaller, local groups carried out the blasts, not more sophisticated and better equipped networks, such as Lashkar, which has already denied a hand.