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Sarabjit Singh, whose family say he is the victim of mistaken identity, was to be hanged on April 1 after being convicted of involvement in 1990 blasts that killed four people in the Pakistani city of Lahore.
But President Pervez Musharraf, who had earlier rejected a mercy petition, delayed execution until April 30.
Speaking to AFP on Friday, Malik Mubashir Ahmad Khan, superintendent of Lahore's Kot Lakhpat jail, read out an interior ministry order, which said: "The execution of Indian national, Sarabjit Singh is stayed till further order."
The stay of execution, which jail authorities received on Friday, came days after Singh's wife, daughters and sister visited Lahore to met him in prison.
The Supreme Court had earlier rejected an appeal against Singh's death penalty.
Pakistan maintains Singh was an Indian spy, but he and his family say he is a farmer who accidentally strayed across the border into Pakistan while drunk. He has been in jail in Pakistan since 1990.
His family say he was confused with another man named Manjit Singh, whom Pakistan blames for a series of bombings in Lahore.
India and Pakistan, which both have nuclear weapons, have fought three wars since independence and partition in 1947, and routinely accuse each other's spy agencies of bomb attacks.
But ties have improved since the launch of a slow-moving peace process in 2004.
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