Pakistan has served a notice to India asking it to stop work by December 31 on the Baglihar hydro power project on the river Chenab in Jammu and Kashmir.
Pakistan claims the project violates the 1960 Indus Water Treaty.
The notice says if the work on the project is not suspended by December 31,
Pakistan will call for international arbitration under the aegis of the World Bank.
The notice followed a recent visit of a team of Pakistani officials to the Baglihar project.
Prime Minister Atal Bihari Vajpayee is likely to visit Pakistan in the first week of January next year for the South Asian Association for Regional Cooperation summit.
The issue is expected to figure in the meetings between Vajpayee and his Pakistani counterpart, Mir Zafarullah Khan Jamali, on the sidelines of the summit.