Malaysian-born Top is a prime suspect in last month's near simultaneous suicide attacks on Jakarta's JW Marriott and Ritz-Carlton hotels, which killed nine people and wounded 53.
Police hunting the mastermind of last month's attacks on hotels raided two houses on Saturday, Aug 8 killing two suspected militants, arresting five others and seizing explosives and a car bomb, a senior officer said.
A police source said he was shot dead during the raid in the province of Temanggung, in central Java, and they were trying to identify the body, ABC news online reports.
The developments appeared to be the first major break in the investigations into the attacks, which killed nine people and broke a four-year gap in terror strikes in Indonesia, the world's most populous Muslim nation.
Top is suspected in all of Indonesia's major terror attacks since 2002, including blasts on the resort island of Bali in 2002 that killed 202 people, most of them foreign tourists, The Age repots.
Noordin is a Malaysian citizen who claimed in a video in 2005 to be al-Qaeda's representative in Southeast Asia and to be carrying out attacks on Western civilians to avenge Muslim deaths in Afghanistan.