The Army was taken into confidence and its concerns were addressed before arriving at a decision that the security forces will not launch any operations in Jammu and Kashmir during the holy month of Ramzan, government sources said.
Sources, however, said that "limited operations" based on specific intelligence will continue.
"Army has been given the right to retaliate to any attack," a source said.
The Home Ministry said the security forces reserve the right to retaliate if attacked or if essential to protect the lives of innocent people.
During this period, road opening and sanitisation of routes will continue.
The decision not to launch any operations during Ramzan was taken to help the peace loving Muslims observe Ramzan in a peaceful environment, a Home Ministry spokesperson said.
Jammu and Kashmir Chief Minister Mehbooba Mufti and opposition National Conference leader Omar Abdullah welcomed the Centre's decision.
The move of the Centre is similar to the Non Initiation of Combat Operations (NICO) announced by the first NDA government, headed by Atal Bihari Vajpayee, during Ramzan in 2000.