NEW DELHI, Aug 20 (Reuter) - India and China agreed on Sunday to pull back their troops from four border posts in India's northeastern state of Arunachal Pradesh, parts of which are claimed by Beijing, officials said.

The decision followed two years of talks to ease tensions along the 4,000-km (2,500 miles) Himalayan border, cause of a brief war between the Asian giants in 1962.

The two countries had agreed to work for peace and tranquillity along the disputed frontiers when Indian Prime Minister P.V. Narasimha Rao visited Beijing in September 1993.

"This is a major advance and a positive development where two countries have gone beyond enunciating general principles on the implementation of the 1993 border peace and tranquillity agreement," Indian Foreign Secretary Salman Haider said.

He was speaking to reporters after three days of talks with an 11-member Chinese delegation headed by Vice Foreign Minister Tang Jiaxuan.

The two delegations comprised officials from the ministries of external affairs and defence and army headquarters.

The India-China joint working group was established during the visit of then Prime Minister Rajiv Gandhi to Beijing in 1988. Prime Minister P.V. Narasimha Rao signed a border peace and tranquillity agreement when he visited China in 1993.

Indian newspapers said India had used the occasion to express concern over China's supply of M-11 missiles to its neighbour Pakistan.

Tibetan exiles demonstrated in New Delhi against the visit of the Chinese delegation on Friday, saying that the border was between India and Tibet and China had no right to negotiate. China annexed Tibet in 1950.

The Press Trust of India said Sunday's agreement set the ground for the disengagement of two Indian posts and two Chinese posts at Sumdarung Chu Valley in the Wangdung area where rival troops are separated by as little as 50 yards (metres).

Haider said the withdrawal would be undertaken "without prejudice to respective positions on the alignment of the Line of Actual Control (LAC) in the area" dividing the armies.

The two sides also decided to regulate and prevent "dangerous" military activity such as firing and hunting close to the LAC, PTI said. Other confidence-building measures included prior notification of military excercises and prevention of air intrusions across the LAC.