Encounter broke out between militants and security forces during a Cordon and Search Operation (CASO) in Verinag area in this south Kashmir district on Saturday, a police spokesman said.
He said on a tip off about the presence of militants, Special Operation Group (SOG) of Jammu and Kashmir police, CRPF and Rashtriya Rifles (RR) launched a CASO in the wee hours at Nowgam in Verinag.
However, when advance search party was moving towards a particular area, militants hiding there opened indiscriminate firing with automatic weapons, he said adding security forces also retaliated ensuing in an encounter.
Two to three militants are believed to have been trapped in the area, he said adding operation was going on when the reports last came in.
Meanwhile, additional security forces have been deployed in the adjacent areas to prevent any demonstration, official sources said adding mobile internet service has been snapped as a precautionary measure to prevent spread of rumours.