The 2G mobile internet service was suspended on Wednesday evening after rumours spread on social media about the health condition of chairman of hardline Hurriyat Conference (HC) Syed Ali Shah Geelani.
The son of Geelani rejected the rumours and said the separatist leader was fine.
Police warned that stern action would be taken against those spreading rumours on social media by using VPN illegally.
Official sources said that 2G mobile internet service was suspended on Wednesday evening following illegal use of VPN to spread rumours about the health of Geelani.
However, in some areas, mobile internet was restored Thursday afternoon.
The sources said a high-level meeting was held to review the situation after rumours. A team of doctors from a hospital also visited the residence of Geelani late last night.
A number of social media posts had claimed that the condition of 90-year-old has deteriorated yesterday.
Divisional Commissioner, Kashmir, Baseer Ahmed Khan today termed the reports about death of Geelani as baseless. He said a team from SKIMS visited his home for health check up.
"I personally spoke to his son also. He confirmed Geelani sahib is stable," Khan said.
He said that rumours about his death are totally baseless. The Divisional Commissioner has directed officers concerned to verify why rumours about Geelani's death were circulated and who was behind all this.
He was also joined by IGP Kashmir Vijay Kumar and Director SKIMS Dr A G Ahanger at a late night meeting to ascertain the factual position about Geleani's health.
Police said legal action will be taken if anyone is found to be spreading rumours. Kindly desist from forwarding rumours and propaganda material on social media platforms.
The 2G internet was resumed only on January 25 after remaining suspended for over 170 days since August 5, when the Centre scrapped Article 370 and divided the state into two Union Territories (UT). However, this access was for just 301 ''whitelisted'' websites.
This is the third time in the last five days that mobile internet services have been suspended as a precautionary measure to prevent rumours.
On February 11, the services were snapped on account of the death anniversary of JKLF founder Maqbool Bhat On February 9, services were cut off due to a bandh call by separatist groups on the death anniversary of Parliament attack convict Afzal Guru.
However, the high speed internet and broadband service remained suspended since August 5.