"Five other persons managed to escape and we are in their pursuit," City police chief Waseem Ahmed said.
According to the police, the five killed militants were close aides to Tehreek-e-Taliban leader Baitullah Mehsud who is on the most wanted of Pakistan and United States authorities.
"We have recovered heavy ammunition and explosive materials from the site where these people were hiding," Ahmed said.
The raid was conducted based on the confession of other terrorists arrested earlier. Ahmed also said that terrorists were hiding among the displace people in the Swat valley where the Pakistan offensive against the Taliban continues since Apr 2009.