Sarabjit Singh was a death row prisoner in Lahore's Kot Lakhpat jail, when he was beaten by two fellow inmates last Sunday.

He died of a cardiac arrest on Thursday morning, but, in an extraordinary move, his body has been flown back to India by airforce jet for a state funeral on Friday.

Pakistan says Singh was an Indian government spy, known as Manjit Singh, who had been involved in plotting and carrying out bombing attacks inside Pakistan. Arrested near the border in 1990, he was charged and convicted, and has since been held in Pakistani custody.

But over more than two decades the Indian government refused to admit he was their man, and claimed his arrest was a case of mistaken identity.

Singh's family said he had wandered across the Pakistani border accidentally when he was drunk, had no connection to the Indian government, and had never been involved in terrorism.

After Singh was viciously bashed by fellow death-row inmates, India pleaded for his return so he could die in his home country, but Pakistan refused.

Now, a long-abandoned argument over his arrest and conviction has been reignited by his death.

Singh's death has precipitated extraordinary outrage across India. Prime Minister Manmohan Singh (no relation) said he and the whole Indian nation shared a profound grief at his death.

"He was a brave son of India who bore his tribulations with valiant fortitude. The criminals responsible for the barbaric and murderous attack on him must be brought to justice. It is particularly regrettable that the government of Pakistan did not heed the pleas of the government of India, Sarabjit's family, and of civil society in India and Pakistan to take a humanitarian view of this case."

India's external affairs minister said Sarabjit Singh's death would not be forgotten.

"A sustainable and long lasting relationship between two countries has to be between people. That relationship has been hurt by what has happened today," Salman Khurshid said.

Singh's wife, Sukhpreet Kaur, and his daughters Poonam and Swapandeep saw him briefly in hospital before he died. They have since returned to India.

India and Pakistan, who have fought three wars over their 65 years as independent neighbours, had recently made progress on their bilateral relationship, improving trade links and holding high-level talks on counter-terrorism.

But a series of clashes between troops on the contested Kashmir border in January reignited tensions. Five troops were killed, on both sides of the border, and India was particularly aggrieved by the beheading and mutilating of one of its soldiers' bodies.

The Pakistani government is currently in caretaker mode before elections next week, but the foreign office said Singh was provided the "best possible treatment" in hospital. Two prisoners have been charged over the attack.