PAKISTAN faced worldwide condemnation and the pro-spect of damaging economic sanctions last night after responding to India's nuclear challenge with five test explosions of its own.

Hours after the tests, Pakistan president Rafiq Tarar declared a state of emergency, citing threats of ''external aggression''. The emergency suspends the country's constitution and legal system.

India was also warned of ''massive retaliation'' if it attacked.

The armed forces said troops were on alert at nuclear installations around the country.

In Washington, a US official said Pakistan was preparing for a further possible test. ''We have indications that they are working at a second site,'' the official said, adding that it could be ready ''in the next couple of days''.

The tit-for-tat tests, which could precipitate a nuclear showdown between two bitter rivals, sparked outrage, with President Bill Clinton calling on the two nations to ''reverse the dangerous arms race''.

Tony Blair made clear his ''dismay'' after Pakistan rejected his last-minute appeals for restraint following India's tests a fortnight ago.

With defence experts warning of the most dangerous nuclear showdown since the Cuban missile crisis of 1963, Pakistani premier Nawaz Sharif insisted his nation's nuclear capability was reserved for ''self-defence'' and said the tests were the will of his people. ''We have settled the account of the nuclear blasts by India,'' he said.

Pakistan, however, sent diplomatic shock waves through the international community, by warning it had acted after receiving information that India planned to launch an attack on its test sites.

India rejected the charge as malicious, and the country's overtly nationalist Hindu government condemned the move and struck a belligerent tone. Premier Atal Behari Vajpayee warned: ''India is ready to meet the challenge.''

Downing Street said Mr Blair, with Britain holding the EU presidency, would be talking to Foreign Secretary Robin Cook to discuss a ''proportionate'' response.

Mr Cook said: ''We condemn this action which runs counter to the will expressed by 149 signatories to the Comprehensive Test Ban Treaty to cease nuclear testing, and to efforts to strengthen the global non-proliferation regime.

''It accentuates our grave concern about the increased risk of nuclear and missile proliferation in South Asia, and of escalating tension in that region.

''We urge Pakistan, along with India and other states in the region, to refrain from further tests and the deployment of nuclear weapons or ballistic missiles.''

In Washington, a visibly dismayed Mr Clinton announced the US would immediately impose sanctions. He had repeatedly appealed to Mr Sharif not to go ahead with the tests, including a plea in a joint telephone conversation with Mr Blair last week.

''It is now more urgent than it was yesterday that both Pakistan and India renounce further tests, sign the Comprehensive Test Ban Treaty and take decisive steps to reduce tensions in South Asia and reverse the dangerous arms race,'' Mr Clinton said.

Pakistan and India are in a near-permanent state of confrontation over the contested Kashmir region. Analysts fear the conflict, which has seen the two nations go to war twice in the past 30 years, could escalate dangerously.

India, which controls two thirds of Kashmir, accuses Pakistan of stoking the eight-year-old insurgency there. Islamabad says it only offers moral and diplomatic support to the rebels.

Yesterday's tests, in Baluchi-stan, barely 30 miles from the borders with Iran and Afghanistan, were monitored by US satellites. The seismic shocks were detected as far as Britain and Australia.

In a nationwide television ad-dress, Mr Sharif said his government never wanted to get into the nuclear arms race, but India's nuclear arms ambitions forced Pakistan to match them.

China, the region's other nuclear power suspected of supplying technological assistance to Pakistan's nuclear programme, blamed India for the crisis and expressed deep regret.

China and India have a history of mutual suspicion, and the two fought a brief border war in 1962. New Delhi cited the threat of a nuclear-armed China as one reason for its nuclear tests.

Japan, Pakistan's biggest aid donor and trading partner, said it would consider imposing stiff economic sanctions against Islamabad, thereby matching the action it took against India.

Germany and France also condemned Pakistan while Russia expressed deep regret and concern. Australia cancelled an offer to double bilateral aid.

Analysts expect Pakistan to be hit hard by any sanctions, but last night its people were rejoicing, with some firing off guns in the streets.

The condemnation of Pakistan's action was joined by Shadow Foreign Secretary Michael Howard who said the explosions were ''very much to be regretted''.

The Liberal-Democrat foreign affairs spokesman, Menzies Campbell, warned: ''Unless there is restraint and common sense the nuclear powder-keg in the Asian sub-continent could easily be ignited.''