In a statement, the US State Department clarified that the Kashmir dispute was a "bilateral" issue between India and Pakistan, and the US "welcomes" the two countries "sitting down" for talks.
It also said Pakistan taking "sustained and irreversible" steps against terrorism is key to a successful dialogue with India, according to a PTI report.
"While Kashmir is a bilateral issue for both parties to discuss, the Trump administration welcomes Pakistan and India sitting down and the United States stands ready to assist," a State Department spokesperson said in response to a question if Trump's remarks reflect a change in the US policy on Kashmir.
The State Department’s comments came after India on Monday firmly refused an offer by Trump to mediate between India and Pakistan on the Kashmir dispute. New Delhi also denied Trump’s statement that Prime Minister Narendra Modi had asked him to mediate on the issue.
Trump’s remarks were made at his meeting with Pakistan Prime Minister Imran Khan at the White House on Monday. "If I can help, I would love to be a mediator," Trump was quoted as telling reporters with Khan beside him.
"I was with Prime Minister Narendra Modi two weeks ago and we talked about this subject and he actually said 'Would you like to be a mediator or arbitrator', I said 'Where', He said 'Kashmir'. Because this has been going on for many, many years... I think they would like to see it resolved and you (Imran Khan) would like to see it resolved. If I can help, I would love to be a mediator," Trump said, referring to a meeting with Modi on the sidelines of the G20 meeting in Osaka, Japan.
Khan was quick to respond, saying “prayers of over a billion people will be with you if you can mediate and resolve the situation," news reports from Washington said.
In a series of tweets, Indian foreign ministry spokesman Raveesh Kumar contradicted Trump’s statements, saying "no such request has been made" by Modi.
“We have seen @POTUS's remarks to the press that he is ready to mediate, if requested by India & Pakistan, on Kashmir issue. No such request has been made by PM @narendramodi to US President. It has been India's consistent position...1/2"
“..that all outstanding issues with Pakistan are discussed only bilaterally. Any engagement with Pakistan would require an end to cross border terrorism. The Shimla Agreement & the Lahore Declaration provide the basis to resolve all issues between India & Pakistan bilaterally.2/2" Kumar said in two Twitter posts.
Welcoming the developments, Pakistan foreign minister Shah Mehmood Qureshi tweeted: “This is a new chapter in Pakistan-US relations. PM @ImranKhanPTI had an exceptional meeting with Pres Trump. Not only did @POTUS acknowledge Pak's crucial role in Afg peace process but also offered to facilitate talks b/w Pakistan & India on the Kashmir dispute. #KhanMeetsTrump."
New Delhi has always held that Kashmir is a bilateral dispute to be sorted out between India and Pakistan, and the US had previously upheld this stance. Islamabad on the other hand has always sought foreign intervention to resolve what it calls an outstanding issue between India and Pakistan.
India has also refused to restart a dialogue with Pakistan despite repeated appeals from Khan, maintaining that Pakistan must first take action against terrorists operating from its soil.
Ties between the two nations nosedived after the terror strike at Uri in 2016 -- and further deteriorated after a suicide attack by a Jaish-e-Mohammed terrorist that killed 40 soldiers in Jammu and Kashmir's Pulwama on 14 February.
Days later, India conducted air-strikes on a Jaish camp in Pakistan's Balakot on 26 February. The Pakistan Air Force struck back, targeting civilian and military installations in India and captured Indian Air Force pilot Abhinandan Varthaman.
Meanwhile, reactions to Trump’s reported offer of mediation poured in swiftly on Twitter.
“Everyone who knows anything about foreign policy in South Asia knows that #India consistently opposes third-party mediation re #Kashmir. Everyone knows PM Modi would never suggest such a thing. Trump’s statement is amateurish and delusional. And embarrassing," said Democrat congressman Brad Sherman.
“I just apologized to Indian Ambassador @HarshShringla for Trump’s amateurish and embarrassing mistake. 2/2," he added.
Congress party lawmaker Shashi Tharoor in a tweet said: “I honestly don't think Trump has the slightest idea of what he's talking about. He has either not been briefed or not understood what Modi was saying or what India's position is on 3rd-party mediation. That said, MEA should clarify that Delhi has never sought his intercession."