By Fayaz Bukhari

SRINAGAR, India (Reuters) - Indian soldiers shot dead seven suspected militants who tried to attack two army bases in northern Kashmir on Thursday, police said, prompting anger from Pakistan as a crisis between the two neighbors over the disputed region grows.

The attacks came after India and Pakistan exchanged more gunfire across the frontier in Kashmir overnight, the Indian army said, despite a 2003 ceasefire. The latest round of tensions started in July when protests erupted after Indian forces killed a separatist leader.

Three suspected militants were shot in an orchard near the army base in Kupwara district near the Line of Control, the de facto border that divides Kashmir between India and Pakistan, which both claim the Himalayan, Muslim-majority region.

Another four suspected militants were killed after they fired at the Indian troops in Nowgam sector of North Kashmir, said police superintendent Ghulam Jeelani.

India accuses Muslim Pakistan of backing the separatists and helping them infiltrate Indian-ruled Kashmir. Pakistan denies this, saying it only offers moral and diplomatic support to the Kashmiri people in their campaign for self-determination.

Last week India announced its special forces had carried out a strike against militants camped on the Pakistan side of Kashmir and inflicted significant casualties.

Pakistan denied such a strike had taken place and accused India of fabricating the raids for political reasons.

Pakistan's military chief said Pakistan would not hesitate to take respond.

"Any aggression, born out of deliberate intent or even a strategic miscalculation, will not be allowed to go unpunished and will be met with the most befitting response," said General Raheel Sharif, the head of Pakistan's military.

India said it has ample evidence to prove that a strike was conducted but concerns regarding national security will be assessed before releasing any proof.

On Wednesday night, militants from Pakistan unsuccessfully tried to breach the Line of Control at two points in the Nowgam sector and one at Rampur, an Indian army spokesman said.

Another army officer said that when soldiers fired at them, the suspected militants fled back to Pakistan.

The two sides traded artillery fire across the Line of Control in Nowshera, Pallanwala and Mendhar sections overnight, the Indian army said.

Pakistan said India initiated the shelling, which often increases along the Line of Control during periods of tension.

(Additional reporting by Drazen Jorgic and Asad Hashim in ISLAMABAD Editing by Paul Tait, Robert Birsel and Raissa Kasolowsky)