He said this after meeting an all party delegation from Jammu and Kashmir led by Chief Minister Omar Abdullah and lasted nearly four hours.
However, Singh added that the autonomy would be within the ambit of the Constitution. He also said that the presence of senior ministers at the meeting showed the seriousness of his government's commitment to address the Kashmir issue.
While leaders of the main opposition party in the state, the People's Democratic Party had boycotted the meeting.
Union Home Minister P Chidambaram said the meeting went on well and the Prime Minister heard all the views of delegation members.
Sources say during the meeting, Jammu and Kashmir Chief Minister Omar Abdullah was pulled up for failing to handle the violence in the Valley in which over 50 protesters were killed in police action since Jun 11.
However, Omar defended his government's handling of the situation and told that parties in the state were not in favour of Governor's rule.
Having concern for the youth, Manmohan Singh said they should go back to their schools and colleges and resume studies. He proposed to set up an expert group headed by Dr C Rangarajan with N R Naryanmurthy, Tarun Das and others to formulate a jobs plan for the state involving both public and private sectors.
Singh also spoke on the role of security forces in the Valley and urged the state government to take action to protect policemen and their families.
"Jammu and Kashmir Police and other security forces are performing an extremely challenging task in difficult circumstances... we should not do anything to demoralise the security forces," he added.