"It's unacceptable for anything to happen in Pakistan that is responsible for promotion of terrorism elsewhere. To be fair to Pakistan, they have taken some steps," said the British PM.
Cameron however, ruled out his country mediating on the Kashmir issue between India and Pakistan, saying it was for them to settle their issues.
"I don't think Britain is a great place to mediate on this issue," 43-year-old Cameron, who is on a two-day maiden visit to India, told NDTV.
His view was sought against the backdrop of controversial comments made by leaders of the previous government that was frowned upon by Delhi.
Cameron, who will hold talks with Prime Minister Manmohan Singh here on Thursday, said, "We want India and Pakistan to have good relations, to have good dialogue and to settle these issues between them. It is for India and Pakistan to do that."
Britain, he said, welcomed the fact that India and Pakistan have had contacts. "It is for you to decide," he said.