Chinese troops started retreating into their territory from 9:45 pm, the sources said, adding that the Indian army, which was present also in large number in the area, also started simultaneously reducing their presence in the area, about 300 km east of Leh.
The sources said that a vigil was still being maintained as the Chinese People's Liberation Army had camped just across the Line of Actual Control and the situation would be reviewed on Friday.
However, the stand-off in Demchok where Chinese nomads -- Rebos -- had pitched their tents continued for the 12th day today. The incursion in this area is nearly 500 metres deep into Indian territory, the sources said.
The Chinese nomads actively helped by the PLA have been protesting against an irrigation canal being built for the local villagers.
The standoff in Demchok and Chumar had cast a shadow on Thursday’s summit talks between Prime Minister Narendra Modi and Chinese President Xi Jinping.
The sources said that the Chinese side pushed in more troops before the break of dawn with more banners asking the Indian Army to leave the area.
The number of Chinese troops had shot up to 600.
Chinese helicopters were seen hovering at least thrice during the day air dropping food packets for its troops, they said.
The Chinese side had been constructing a road on their side of LAC but on Sunday, its workers entered into Indian side to carry on the construction.
This was objected by the Indian side as Chinese workers were making assertions that they have instructions to build a road upto Tible, five kilometres deep into Indian territory, the sources said.
The Indian army asked the Chinese workers to leave as otherwise they would face prosecution under Indian laws of entering into the country illegally.
However, during the intervening night of Sunday and Monday, nearly 100 Indian soldiers were reported to have been encircled by 300 Chinese PLA men after which a face-off started.
India also rushed reinforcements to the area and were not allowing the Chinese troops to proceed further and also asking them to retreat to their side.
Both the Indian and Chinese armies were maintaining a distance of 200 metres from each other.
There was no flag meeting today and the decision to withdraw from the area was suo moto taken by the Chinese side, the sources said.
The two sides have held two flag meetings so far which included a marathon discussion on Wednesday that continued for several hours and remained inconclusive.
Chumar, the last village in Ladakh area bordering Himachal Pradesh, has been a bone of contention with China claiming it to be its own territory and has been frequenting the area with helicopter incursions almost every year.
In 2012, the PLA dropped some of its soldiers in this region and dismantled the makeshift storage tents of the Army and ITBP.
Chumar had become a flash point during the fortnight long stand-off last year in Daulat Beg Oldie (DBO) as the Chinese side had objected to overhead bunkers erected by the Indian side.
As part of an agreement reached at the flag meeting to end the stand-off from April-May 2013 at DBO, the Indian side had to dismantle some overhead bunkers in Chumar.
Again, Chumar witnessed Chinese troops walking away with an Army surveillance camera on June 17 which was meant for keeping an eye on the PLA troops patrolling there. The same camera was returned after a few days.
During winter this year, Chinese soldiers attempted to enter this area riding on horses. The area witnessed frequent incursion attempts by the Chinese troops who had also adopted 'assertive posturing'.