The two countries have been engaged in a standoff position since April-May timeframe and the Chinese have refused to vacate areas in the Finger area and other friction points in the Eastern Ladakh area.
At the end of their discussions, the Ministers reached an agreement on five points that will guide their approach to the current situation, the sources added.
Earlier, the Chinese government owned Global Times has claimed that Indian troops "illegally crossed" the Line of Actual Control (LAC) near Pangong Tso on Monday and accordingly Chinese troops were forced to take "countermeasures" to stabilise the situation.
India, China standoff-The situation worsened after 20 Indian soldiers were killed in violent clashes with Chinese troops in Galwan valley in June.
Sources told that Defence minister Singh told Chinese side in clear terms that India will not cede an inch of land and is determined to protect its integrity and sovereignty at all costs.
Earlier the Chinese had put out a brief but accusatory statement following Friday night's meeting between Defence Minister Rajnath Singh and his Chinese counterpart.
Sources said the Linzhi airbase opposite the Northeastern states is mainly a helicopter base and the Chinese have also built a network of helipads there to enhance their surveillance activities in those areas.
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"Chinese and Indian border troops on the frontline have disengaged in most locations. The 5th round of commander-level talks is currently under preparation to resolve the remaining issues," Chinese state media Global Times quoted Chinese Foreign Ministry spokesperson Wang Wenbin as saying.