The decision was taken at a late night meeting Prime Minister Manmohan Singh had with Andhra Pradesh Chief Minister K Rosaiah after two rounds of consultations in the Congress Core Committee with Sonia Gandhi and senior cabinet colleagues.

"After these consultations, I am making this statement. The process of forming the state of Telangana will be initiated. An appropriate resolution will be moved in the state Assembly," Home Minister P Chidambaram told reporters late in the night.

"We have asked the Chief Minister to withdraw the cases booked against leaders, students and others associated with the agitation. The Chief Minister said he will take necessary action," Chidambaram said.

The Centre and the Congress party were forced to take such a step after further deterioration in the health of TRS chief K Chandrasekhar Rao, whose fast-unto-death entered the 11th day today and tensions simmered in the entire Telangana region apprehending the worst