Security forces and militants were locked in a nine-hour gun battle in a south Kashmir village till late Friday evening.
The battle ended with the death of two militants, while one of them continued to fire away at the troops. Two security personnel were wounded in the incident.
The three militants engaged the security forces from inside Wullerhama village shrine in Anantnag district.
The surviving militant was still holed up when reports came in.
The area surrounding the shrine has been floodlit to prevent the militant from escaping under cover of darkness.
Sources said the shrine was partially damaged in the firing.