Afghan President Hamid Karzai and Pakistan Prime Minister Yousuf Raza Gilani agreed to work out a "common strategy" to deal with extremism and terrorism, including across the borders, in a joint statement in Colombo on Sunday.

Karzai and Gilani arrived at the decision during a breakfast meeting on the sidelines of the 15th SAARC summit, during which they exchanged views on "the common challenges facing the two countries in terms of dealing with terrorism and militancy".

"Both sides agreed that there was need for the two governments to engage on all issues across the board with a view to developing a common strategy to overcome the challenges posed to the security and stability of both countries by terrorism and extremism," the joint statement said.

"The two sides agreed to coordinate their efforts to stop cross border terrorism," the statement said. It said the leaders will collaborate with their coalition partners - NATO and ISAF (International Security Assistance Force) - in preparing a common strategy.

Both leaders have decided that their respective foreign ministers will meet soon "to prepare grounds for a framework for close and constructive engagement between two countries to build confidence and develop a common strategy at the political, military and intelligence levels", it said.

Although Pakistan Prime Minister Gilani at a meeting with his Indian counterpart Manmohan Singh had said on Saturday that he would discuss the bombing of the Indian embassy in Kabul with Karzai in the backdrop of allegations that the ISI had links with the attack, the joint statement made no reference to the embassy bombing.

Visiting US envoy Boucher on Sunday "welcomed" the statement Gilani made about "looking into the causes and sources of the Kabul bombing" and said that the US was working very closely with Afghanistan, and cooperating with Pakistan and India in their fight against terrorism in all its manifestation.