The nuclear-armed neighbours have each asked one envoy from the other country to leave after a Pakistan High Commission officer based in New Delhi was accused of spying.
India and Pakistan will each expel one diplomat from the other country amid growing tension between the nuclear-armed arch-foes over the disputed region of Kashmir, the countries announced on Thursday.
India said it would expel a Pakistani diplomat based in New Delhi who allegedly ran a spy ring that collected sensitive information about Indian security operations along its border.
The diplomat, Mehmood Akhtar, reportedly worked in the Pakistan High Commission's visa section. He and his alleged Indian accomplices were found with forged documents, defence-related maps, deployment charts and lists of officers working along India's border with Pakistan, Indian police said in a statement.
Akhtar was detained on Wednesday outside Delhi Zoo, where he met two Indian associates whom police believe he had recruited to spy for him, police in the Indian capital said.
Pakistan's High Commission in New Delhi rejected the allegations, saying in a statement it "never engages in any activity that is incompatible with its diplomatic status".
"There was a high probability that the information passed on by these anti-national elements to PIO (Pakistan Intelligence Operative) is being used against the national interests and could be highly detrimental to national security," they said, adding they had been trying to break up the spy ring for six months.
An Indian foreign ministry spokesman said Akhtar, who was released from custody under diplomatic immunity rules, must leave the country by Saturday.
Late Thursday night, Pakistan's foreign ministry said it declared an Indian diplomat, Surjeet Singh, persona non grata and given him 48 hours to leave the country.
The statement said Singh was accused of activities "that were in violation of the Vienna Convention and the established diplomatic norms" but did not elaborate further.
An aide to India's prime minister in New Delhi said the government was looking into the matter.
India's external affair's ministry spokesman was not immediately available for comment.
India and Pakistan have been at loggerheads since a group of gunmen killed 19 Indian soldiers in September at an army camp in Kashmir, an attack India blamed on a Pakistan-based militant.