Panic in the dark as slum is attacked by Islamic militants

Death toll rises to 27, including two blind beggars, after a terrorist strike that renews fears of war between India and Pakistan

The electricity was out, so some residents of the Kashmir shanty town had gathered around a radio to listen to the India v England cricket match broadcast live from Lord's.

They were so engrossed in the match that they did not stir when the Islamic militants disguised as Hindu holy men struck. They hurled grenades and fired AK-47s at the poorest of the poor in their labourers' shacks built on a rubbish dump on the outskirts of Jammu.

The resulting carnage in Qasim Nagar on Saturday evening left 27 Hindus dead, including two blind beggars, 13 women and a child.

Yesterday the Indian Deputy Prime Minister, Lal Krishna Advani, flew to the scene, and his government blamed the carnage on Pakistan.

"This is terrorism in its most naked form," said Mr Advani, after he emerged shaken from Qasim Nagar. "I asked a victim in hospital what he did and he said he polishes shoes."

After weeks of relative calm in a dispute between India and Pakistan over Kashmir that brought them to the brink of nuclear war, fears could rise again, although yesterday both sides appeared to be avoiding an immediate escalation.

Jack Straw, the Foreign Secretary, who is due to visit India in a few days in a fresh effort to ease tensions, telephoned his Indian counterpart, Yashwant Sinha, to convey his "shock and outrage" over the attack.

The attack on Qasim Nagar was the deadliest since Islamic militants in Kashmir killed more than 30 people, mostly soldiers' relatives at a military base, on 14 May, and nearly sparked a war.

It was just after seven o'clock on Saturday when two men stopped at a shop at the entrance to Qasim Nagar and asked for cigarettes. After buying the cigarettes, they threw a hand grenade into the shop.

Then they ran towards a temple, and joined by three other men dressed in the saffron robes of Hindu holy men, or sadhus, began throwing grenades and firing assault rifles.

Panicked residents, in darkness because the authorities had not repaired a transformer that burnt down a week ago, were sitting ducks as the militants ran through alleyways, throwing grenades into homes and shooting people on sight.

Despite the presence of armed police at a highway checkpoint barely a hundred metres away from the scene of the massacre, the militants had a free run through the slum before escaping into a forest, which was being searched by Indian troops yesterday.

Officials in Indian-administered Kashmir said they suspected two Pakistan-based militant groups – Lashkar-e-Taiba and Jaish-e-Mohammad – of being behind the attack. No group admitted responsibility.

Angry survivors blocked the highway and heckled government leaders and police officials who had come to review the carnage yesterday.

Grief was mixed with anger and terror as the victims recalled the horror. "My mother and father are dead, my daughter is dead. My life is completely ruined," said Kailash, a labourer. "Now there is nothing left here for me. I want to go back to my village."

Mr Advani, who is also the Home Minister, tried to address the agitated crowd on a loud-hailer, but the people were in no mood to listen. They shouted slogans against the police and railed against the government. "They're all thieves and scoundrels. Nobody wants to protect us," a woman wailed.

With three more deaths in hospital yesterday, the toll rose to 27, including 13 women and a child. The condition of five of the 28 injured was critical.

The two blind beggars were probably trapped in the small temple in the slum.

The victims of the raid, their shrouded bodies covered in flowers, were cremated in a mass ceremony in Jammu. Smoke from pyres streaked the sky throughout the afternoon as temperatures soared and pre-monsoon winds whipped up ash and dust.

Qasim Nagar's location – on the outskirts of the Kashmir winter capital, Jammu, along the highway to Srinagar, and next to a dense forest – made it particularly vulnerable to a terrorist strike. After two serious attacks in Jammu this year, security had been tightened in the entire region.

A local police chief said that police rushed to the slum soon after the firing began, but residents said they failed to arrive for nearly an hour, despite desperate pleas for help.

"Some of us ran to the policemen at the highway checkpoint and asked for help, but they refused to come, saying: 'Sahib [the officer in-charge] is not here'," a slum-dweller told The Kashmir Times.

The residents said that when the police did arrive they fired indiscriminately in the dark, adding to the death toll.

Police incompetence has often been alleged in dealing with terrorism in the disputed territory where corruption and mismanagement are rife.

The Pakistan government swiftly issued a statement to condemn the attack. The Foreign Ministry said: "The motivation seems to be to enhance tension in the region."

But the Indian government will clearly need some persuading that the Pakistani leader, General Pervez Musharraf, has kept his promise to rein in cross-border terrorism. India is to make public its response in parliament today.

There are fears that tensions will rise still further as Hindus prepare to trek to a cave shrine called Amarnath on 22 July.

In a sign of the heightened anxiety in the Kashmir region, there was panic in Jammu city on Saturday night, several hours after the attack in Qasim Nagar, after a television news report that terrorists had struck in the upmarket Gandhi Nagar district. The local correspondent of a satellite channel said he was fleeing his office because he could hear explosions all around as terrorists raided the heart of the city.

But the blasts he heard were actually the sound of firecrackers being set off as jubilant cricket fans celebrated India's win over England in the NatWest Series final at Lord's. The news channel sheepishly acknowledged the error in later news bulletins.