Gouri - Ok, I added that page you mentioned as described above - it made no change to the ranking of my index page at all which links to it in the way described above.
I can tell you that since then, I have added another page linked to from the index page also, with the anchor on the index as "pink word1 word2" - the target new page is called "word1_word2_pink.html" (yes pink at the end instead of the front just to mix things up a bit). The content of the new page is inclusive of a title reading "pink word1 word2 specification" and pink word1 word2 and word1 word2 and word1 and word2 combinations are spattered around the new page.
I added this page a couple of weeks ago - the main index page which links to it is now cached (cache "snapshot" date 19/august) and ranks number 4 on google for pink word1 word2 searches just because of the anchor text to the new page (it is worth noting perhaps that the index page we are ranking here did not previously mention the word pink). The new page itself doesnt show for a search of "pink word1 word2" - but DOES show at number 1 for its title exact match search of "pink word1 word2 specification".
Further information - I can say that although the snapshot date says 19/august - this was only updated today on google - so for the past 7 days the cache snapshot date was out of date.
Note that any "" above should be removed for search descriptions - I never use "" to search - thats just for clarity here.
And the crux of all this - my index page is still in the same spot - no movement.
I will add another page tomorrow and link to it from the index page - it is required by the site - rather than for SEO - and will be based around "word1 word2 newword1 newword2 instructions"
I hope this helps you guys - but it didnt help me. :(