Confirming the clashes and police firing, DGP Prasad Rao said three were killed in the firing.
Cyberabad police commissioner CV Anand and Hyderabad police commissioner Anurag Sharam said the situation is under control and those responsible for the clash were taken into the custody.
Trouble began after the houses and shops of a particular community were attacked
Curfew was imposed to bring the situation under control in Sikh Chowni in Kishan Bagh under the limits of Rajendernagar police station, a part of Cyberabad police commissionerate.
Trouble broke out after miscreants attacked houses and shops of a particular community following rumours that a religious flag was burnt.
Police opened fire to disperse the clashing groups killing two people and injuring nine, a police spokesman of Cyberabad told IANS.
Cyberabad Police Commissioner C.V. Anand said the situation was brought under control. He appealed to people to maintain calm and cooperate with the police in restoring peace.
As tension spread to the adjoining areas of the old city of Hyderabad, police imposed prohibitory orders. Additional police and paramilitary forces were rushed to the troubled area.
Shopkeepers in the markets around the historic Charminar downed shutters while police stepped up patrolling.
Personnel of Rapid Action Force (RAF) were deployed in the communally sensitive old city. Several RAF vehicles were seen moving into the interior areas as a precautionary measure.
One person was killed and several were injured in the violence in the same area over a similar incident few years ago.