Security forces late on Friday evening stormed a shopping complex looking for two militants who had attacked Jammu and Kashmir Chief Minister Mufti Mohammed Sayeed's residence in Srinagar in the morning.
The operation began minutes after seven computer students trapped on the top floor of the building were evacuated with the help of a rope ladder.
A heavy exchange of fire was on between the militants and the security forces when this report was filed.
The militants had attacked the chief minister's Maulana Azad Road residence from a building across the road, hurling grenades and firing from automatic weapons. They had later moved into a nearby shopping complex.
A crack team of the Rashtirya Rifles, the elite counter-insurgency unit of the army, with Border Security Force and state
police personnel stormed the Ali Jan shopping complex around 1900 IST, official sources said.
A senior Border Security Force officer told rediff.com that Sayeed had left his residence before the attack.
At least two BSF soldiers and one civilian were killed in the heavy firing.
Hundreds of paramilitary troops immediately moved into position in the area.
Police sources said the chief minister's daughter, Mehbooba Mufti, and other family members were inside the house when the attack took place.
The firing and explosions triggered panic in the city and passersbys were seen running for cover.
Two photojournalists were injured in a grenade explosion. The police identified them as Rafiq Maqbool, an Associated Press photographer, and Syed Muzaffar of local Urdu daily Srinagar Times. They were shifted to the SMHS hospital.
Three security personnel were also injured when the holed up militants hurled a grenade at them. Police sources said the injured were two members of the elite Special Operations Group and a BSF trooper.