The US president made the comments while addressing a press conference in the Indian capital on the last day of his two-day visit, after holding meetings with the Modi administration.
Trump's remarks came in response to a question on terrorism in Pakistan.
"We talked a lot about it at length today. No question it is a problem. They are working on it. I said I will do whatever I can do to help because my relationship with both gentlemen [Prime Minister Imran Khan and Indian PM Narendra Modi] is so good. Anything I can do to mediate, I would do," he said.
"They [Pakistan] are working on Kashmir. Kashmir has been a thorn in lots of people's sides for a long time. There are two sides to every story. We discussed terrorism at length today," he added.
However, when pressed further by another reporter about India's past rejection of his offers, the publication quoted Trump as saying: "I didn't say anything about that [being a mediator]. Kashmir obviously is a big problem between India and Pakistan, they are going to work out their problem. They have been doing it for a long time."
Trump has offered to mediate between the two countries on Kashmir on multiple occasions. Earlier this year, he reiterated the same during a meeting with Imran on the sidelines of the World Economic Forum assembly in Davos, Switzerland.
However, India has categorically rejected the offer to mediate, calling the issue an internal matter. Most recently, Indian Ministry of External Affairs Spokesperson Raveesh Kumar said: "There is no role for any third party in the Kashmir issue. It is a bilateral issue between India and Pakistan."
Elsewhere in the Indian capital, new violence erupted a day after at least seven people, including a police officer, were killed and nearly 100 others reportedly injured in clashes between hundreds of supporters and opponents of a new Indian citizenship law, police said.
Protesters in several areas of northeast Delhi defied orders prohibiting the assembly of more than five people and threw stones and set some shops and vehicles on fire, a police officer said. Some homes were attacked with rocks.
However, on Tuesday, Trump declined to comment on India's new citizenship law. "I don't want to discuss that. I want to leave that to India," he said. But he added that he privately had raised the issue of religious freedom with Modi and that "Modi was incredible on the subject".
"He wants people to have religious freedom," said Trump, who proposed temporarily barring all Muslims from entering the US during his 2016 campaign and successfully implemented a travel ban that targets travelers from certain Muslim countries.
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