"Leave has been cancelled because of the situation. All soldiers have been asked to report to duty," an official speaking anonymously said.
The Pakistani military did not immediately comment, but several soldiers confirmed the story.
US officials are watching with growing concern as reports suggest that Pakistan is massing troops on the India border.
Gordon Johndroe, the White House spokesman, said on Friday that the US hopes both sides will avoid unnecessarily raising tension.
One US senior military official said the US is monitoring the issue, but could not confirm assertions from Pakistani intelligence officials that some 20,000 troops were on the move, heading to the Indian border.
Tensions discussed
In New Delhi, Manmohan Singh, the Indian prime minister, discussed tensions with Pakistsan during a scheduled meeting about military pay with the chiefs of the army, navy and air force, his office said on Friday.
"The prime minister met the tri-services chiefs to discuss the pay commission issues but obviously the situation in the region was also discussed," said an official from Singh's office, who requested anonymity.
India said it has not cancelled leave for its armed forces.
Sitanshu Kar, the Indian defence ministry spokesman, said: "People are taking leave, no problem. We have an optimum number, which is always maintained."
The foreign ministry in New Delhi, however, advised Indian citizens on Friday that "it would be unsafe for them to travel (to) or be in Pakistan".
The move came after media reports said "several" Indian nationals had been held in Pakistan over the last two days after bombings in Lahore and Multan.
A senior police official in Pakistan's Punjab province denied that any Indians had been arrested but an intelligence agency official, who declined to be identified, said an Indian had indeed been detained on Wednesday.
'Fight any aggression'
Both nations have said that they do not want a military conflict to occur, but Pakistan has said it will respond aggressively if India uses force, which India has not ruled out.
India has blamed Lashkar-e-Taiba, a Pakistan-based group, for the attacks in Mumbai last month which killed 179 people. The attackers hit several targets in India's financial centre.
Babar Awan, Pakistan's minister for parliamentary affairs, said: "We need a de-escalation in tension through negotiations.
"We will continue our efforts at an international level and also at a regional level, but let me make it very clear that we will not surrender an inch. We will fight any adventure, any aggression."
Pakistan has accused its neighbour of violating its airspace on two occasions since the attacks, but later said the incidents could have been accidental. India denies the infringment.
Pakistan has arrested several members of Lashkar-e-Taiba but many people in India remain sceptical that any action by the Pakistani government will be wholehearted.
Diplomatic campaign
India, for its part, has held talks with Pakistan allies Saudi Arabia and China to mount pressure on Islamabad to take action against fighters operating from its soil.
Saud al-Faisal, the Saudi foreign minister, arrived in New Delhi on Friday for talks with Pranab Mukherjee, his Indian counterpart.
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| Mukherjee, left, and Saud discussed terrorism in the context of the Mumbai attacks [AFP] |
New Delhi said Mukherjee impressed on Saud the need for Riyadh to use its influence on Islamabad to ensure that those behind the Mumbai attacks were brought to justice.
Saudi Arabia has immense leverage with the Pakistani establishment because of the amount of funding it sends, including subsidised amounts of oil.
"In the meeting it was agreed that global terrorism has to be dealt with through joint action by all countries," Mukherjee said after the talks.
"We further agreed that whatever action has to be taken to control terrorism should be taken without delay and in a transparent manner. This is not an issue between India and Pakistan but a global issue."
Saud called for setting up an international body to fight with the "cancer of terrorism".
The previous night, Mukherjee talked by telephone with Yang Jiechi, the Chinese foreign minister, and asked China to press Pakistan to dismantle the "terrorist infrastructure" in that country.