Official sources said after noticing suspicious movement in Kundalwan forest in Gurez yesterday evening, security forces launched a search operation in the area.
They said a contact was established with a group of militants in the woods this morning.
When asked to surrender, they said the militant fired at security forces with automatic weapons. Security forces also retaliated ensuing an encounter, they said, adding two militants were so far killed in the exchange of fire.
The operation was still going on when the reports last came in, they added. A Defence Ministry spokesperson was available to confirm the killings.