The Home Minister's concern comes a day after security forces killed two militants in a fierce encounter at Srinagar's Lal Chowk.
"The incident highlights the fact that the country, especially Jammu Kashmir, remains vulnerable to militant attacks sponsored by forces from across the border," Chidambaram said in a statement.
"I would emphasise once again that the country, especially the security forces, must remain in high level of vigilance but there is no cause for panic. We must remain calm and confident that our security forces can face any challenge," he said.
Referring to the Srinagar encounter, which lasted for nearly 22 hours, the Home Minister said that the two militants were fully trained and well equipped by their handlers across the border.