Earlier in the day, the Indian Army had claimed it had "successfully foiled" a "border action team" (BAT) operation by the Pakistan Army in the Keran sector of Jammu and Kashmir, according to Times of India.
According to the Pakistan army's media wing, Inter-Services Public Relations, India used cluster ammunition to target civilians in Neelum Valley on the night of July 30-31.
Foreign Minister Shah Mehmood Qureshi on Sunday asked the Organization of Islamic Cooperation to take immediate notice of Indian aggression and persecution in occupied Kashmir. This is the time to do so as situation deteriorates there and along the LOC with new aggressive actions being taken by Indian occupation forces.
"The only road to peace & security in South Asia runs through a peaceful & just settlement of Kashmir", he tweeted.
Islamabad says illegal cluster bombs, that emit deadly exploding shrapnel and are prohibited under the Geneva Convention, killed two civilians and wounded 11 others in its portion of disputed Kashmir, a claim India denies.
The FO called upon the worldwide community to take immediate cognisance of the deteriorating situation in occupied Kashmir, urge India to act responsibly, and counsel India to work towards "preserving rather than imperilling peace and security" in South Asia.
A top Indian military official said: "Indian Army has offered the Pakistani Army to take over the dead bodies".
The dead, assumed to be BAT members, may either be Pakistani army soldiers or "irregulars" implying militants.
New Delhi has long opposed outside attempts to mediate its dispute with Pakistan over Kashmir.
They include fears that Prime Minister Narendra Modi's Hindu nationalist government could carry out a threat to scrap Kashmir's special status under the constitution. Pakistan is indulging in heavy firing and artillery shelling in the area. A number of attempts by Pakistan to disturb the peace and target Amarnath yatra have been made.
"A BAT attempt was made on one of the forward posts in Keran sector (in Kupwara district) and foiled by alert troops resulting in neutralising of five to seven Pakistani regulars/terrorists", defence spokesman Col Rajesh Kalia said.
Saturday's disclosure by the army about the attack on the border post came on the heels of the government aborting the Amarnath pilgrimage in Kashmir over security threats.
Most Kashmiris support the rebels' demand that the territory be united either under Pakistani rule or as an independent country, while also participating in civilian street protests against Indian control.
There were some 500,000 Indian security forces already based in the region.
About 10,000 additional troops were sent to Jammu and Kashmir last week after a visit to the state by Doval.