A military stand-off between Indian and Chinese troops that lasted nearly two weeks and overshadowed a key summit in New Delhi has ended, India's foreign minister said.

Troops will start pulling back from the disputed border area on Friday, Sushma Swaraj said, after meeting her Chinese counterpart Wang Yi in New York.

"I am very pleased to tell you that both the countries have sat down and resolved this issue," she said, in comments broadcast on Indian television.

"Timelines have been drawn... by September 30, it (withdrawal) will be completed. Whichever positions were occupied by the armies on September 1, they will go back to those positions."

Hundreds of Chinese troops had moved into a territory claimed by India ahead of a visit by China's President Xi Jinping last week, sparking the stand-off on the remote mountainous frontier of Ladakh.

The two countries have long been embroiled in a bitter territorial dispute and small incursions occur frequently across the Line of Actual Control, the de-facto border that runs 4,000 kilometres (2,500 miles) across Ladakh.

But the number of troops involved and the timing of last week's incident raised alarm bells, and led India's Prime Minister Narendra Modi to raise the issue with the visiting Chinese president.

Indian defence sources said construction by both sides had triggered the stand-off in the Chumar area of the far-flung region.

Military officers from India and China on Thursday held talks near the border, triggering hopes of a resolution.