"Pakistan and India faced common problems and it was in the interest of the whole region for the two nuclear powers to resume the dialogue which had stopped after last year's Mumbai attacks," Gilani said, while addressing students and faculty members of the army's Command and Staff College in Quetta.
However, he did not elaborate on what he meant by "olive branch". Pakistan Army chief General Ashfaq Parvez Kayani and senior military officials were also present on the occasion.
Gilani said Pakistan was fighting the war against terrorism for its own survival. The government started military operation in parts of Malakand division as a last option after militants challenged the writ of the government and wanted to disintegrate the country, despite the implementation of Islamic laws, he said.
The government will not tolerate anybody who casts an evil eye on the sovereignty of Pakistan and establishes a parallel government in the country, Gilani said. He said he was hopeful that the government would win the war against terror with the support of the people.
A "3R" strategy comprising relief, rehabilitation and reconstruction had been adopted to overcome challenges that emerged after the launching of military operations in Malakand, Gilani said.
Noting that the Pakistan government has allocated Rs 1 billion for the relief and rehabilitation of people displaced by the fighting, Gilani called on the world community to realise the suffering of Pakistan and help it overcome its financial and other problems.
Replying to a question, Gilani said Balochistan province is extremely important for Pakistan. The government has information about "foreign involvement" in the unrest in Balochistan and will collect more intelligence to take up the issue with concerned governments at an appropriate forum, he added.
The government has conveyed to the United States administration that a planned troop surge in Afghanistan could push militants southwards and destabilise Balochistan, Gilani said.
In response to another question, the premier said his government has conveyed to the US administration that drone attacks in Pakistan's tribal belt are counter-productive and creating problems for the democratic set-up.
"I am hopeful that the Obama administration will review its policy regarding drone attacks in the country," he said.