Pakistan is preparing international legal action over India's suspension of a key river water-sharing treaty, a government minister told Reuters, as tensions intensify between the neighbours following an attack on tourists in India-administered Kashmir.

India blames Pakistan for an attack on its tourists and threatens to disrupt Pakistani water supplies. Islamabad says that move would be an act of war.

Pakistan's defence minister said on Monday a military incursion by neighbouring India was imminent in the aftermath of a deadly militant attack on tourists in Kashmir last week, as tensions rise between the two nuclear-armed nations.