On 13 December 2001, a group of masked, armed men with fake IDs stormed the Parliament building in Delhi. The terrorists managed to kill several security guards, but the building was sealed off swiftly and security forces cornered and killed the men, who were later proven to be Pakistan nationals. Coming just three months after the September 11 attacks upon the United States, this fresh escalation instantly enraged the nation. Although the Government of Pakistan officially condemned the attack, Indian intelligence reports pointed to a conspiracy rooted in Pakistan.Prime Minister Vajpayee ordered a mobilisation of Indias military forces, and as many as 500,000 servicemen amassed along the international boundary bordering Punjab, Rajasthan, Gujarat and Kashmir. Pakistan responded with the same. Vicious terrorist attacks and an aggressive anti terrorist campaign froze day to day life in Kashmir, and foreigners flocked out of both India and Pakistan, fearing a possible war and nuclear exchange. For as long as two years, both nations remained perilously close to a terrible war.

The Vajpayee administration also passed the Prevention of Terrorist Act against vigorous opposition of non NDA parties. Human rights groups have condemned the act which gives wide authority to the government to crack down and hold anybody. Its repeal was advocated by human rights organisations.But the biggest political disaster hit his government between December 2001 and March 2002 the VHP held the Government hostage in a major standoff in Ayodhya over the Ram temple. At the 10th anniversary of the destruction of the Babri mosque, the VHP wanted to perform a shila daan, or a ceremony laying the foundation stone of the cherished temple at the disputed site. Tens of thousands of VHP activists amassed and threatened to overrun the site and forcibly build the temple. A grave threat of not only communal violence, but an outright breakdown of law and order owing to the defiance of the government by a religious organisation hung over the nation. But to the relief of Vajpayee, his government was able to tide over this crisis rather smoothly.