Troops of the Chinese People's Liberation Army (PLA) allegedly entered Indian-claimed territory in eastern Ladakh and erected a camp on the night of April 15, the sources said.
Meanwhile, troops from the Indo-Tibetan Border Police have set up a camp 300 metres opposite the alleged tents pitched by the Chinese, the sources said.
New Delhi is confident it can settle the high-altitude territorial dispute "peacefully" through diplomatic channels, the government sources added.
India and China have an unresolved frontier dispute, and relations are often prickly and marked by mutual suspicion -- a legacy of a brief border war in 1962 that was waged in Ladakh and in the northeastern state of Arunachal Pradesh.
The Asian giants have held numerous sets of talks to resolve the future of their disputed regions but have made little progress.
"(Such) incidents (as the incursion) do occur and are resolved peacefully on the basis of bilateral agreements which exist and mechanisms provided for in these agreements," a senior government source told AFP.
"We are confident the current incident too will also be peacefully resolved on this basis," the source said, adding the nations are in touch via a working committee set up to defuse India-China border tensions.
India says China, which inflicted a bloody defeat on Indian forces in the 1962 war, occupies 38,000 square kilometres of its Himalayan territory, while Beijing claims all of Arunachal Pradesh, an area of 90,000 square kilometres.
The movement of Chinese troops comes as China's infrastructure build-up along the border has become a major source of concern for India, which increasingly views its neighbour as a longer-term security threat than traditional rival Pakistan.
"As regards the distance that the Chinese are inside (Indian territory), this is an area where there have been differing perceptions of the Line of Actual Control," the Indian government source said.
But the Press Trust of India news agency reported the Chinese platoon of around 50 soldiers was 10 kilometres inside the LAC in the Daulat Beg Oldi sector that has an Indian military airstrip.
The airstrip, used by India in the 1962 war, was recently revived by India's military to build up its border infrastructure to counter moves by China in the region.
"The Indian government chooses to underplay Chinese actions so as not to provoke greater aggressiveness," wrote veteran Indian foreign policy analyst Brahma Chellaney in a recent column for Mint newspaper.
But he said government figures show the number of stealthy Chinese forays into territory claimed by India has steadily increased.
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Very simple solution MODI 2014.
@Aschraful Makhlooq: why should we apply same approch for both ( chaina & pak ) . Chaina is our comptetor and u r slave of chaina.
We hav good relation with china we member of bricks so if some issue is thr wr can solve it on table.
And in ur case why ? Let me know
China's foreign policy and instance on such issues is far better, solid and stronger than India and Pakistan! China's govt is elected by wise and educated people! Not like puppets and culprits in India and Pakistan!
@BikramSingh: Sing do you really live in India????
New Delhi is ready, we are strongest Nation on earth. Every Indian is a well fed, well equipped, and well housed. Superior Indian technology under the leadership of Sri Narendra Modi will expel the Chinese.
Just waiting for the Ghairat brigade even if it involves another country :)