The encounter took place when militants hiding in a house fired on a joint search party of police and troops of 42 Rashtriya Rifles on Wednesday, Mar 3, in Mir Mohalla Dadasir, 40 kms from here.
According to police, the operation to flush out the militants was suspended last night due to darkness.
The gunfight resumed this morning and the exchange of fire is going on between the two sides.
Police said, "Three to four militants are believed to be hiding in the houses."
A militant is believed to have been killed in the gunbattle on Thursday, Mar 4. However, police said the death can be confirmed only after the body is recovered.