Seeking to inject new dynamism into their relationship, India and Nepal on Wednesday agreed to review and update all bilateral treaties, including the one that governs aspects of "multi-faceted" and "deep-rooted" ties.

A committee led by Foreign Secretaries of the two countries to "review, adjust and update" the 1950 Treaty of Peace and Friendship and other agreements, said a Joint Statement was issued two days after talks between Prime Minister Manmohan Singh and his Nepal counterpart Prachanda.

With the breach in the Kosi river embankment triggering massive floods in Bihar, the two leaders decided to launch reconstruction of the damaged infrastructure and take up preventive measures to avoid recurrence of such events.

They also agreed to establish a three-tier mechanism at ministerial, secretary and technical levels to improve bilateral relations and push forward discussions on issues like flood control.

Secretary-level talks will be held within the next two weeks on rationalising and raising the efficacy of bilateral mechanisms in order to push forward discussions on the development of water resources in a comprehensive manner, including hydro-power generation, irrigation, flood control and other water-related cooperation.

India will extend Rs 20 crore as immediate flood relief to the people of Nepal and also rebuild segments of the East-West Highway which was damaged in the recent Kosi floods.

India also agreed to provide transit facility through Bihar for vehicles coming from Nepal to give them access to other parts of their country.

A camp office would be set up at Biratnagar to facilitate the movement till the highway is repaired.