An encounter is underway between terrorists holed up inside a house and security forces in Rafiabad area of Kashmir's Baramulla district.

The gun battle broke out in Pazalpora village in Sopore township of the district on Wednesday morning, a police official said, adding that two terrorists are suspected to be in the house.

Following intelligence inputs about the presence of terrorists in the area, security forces launched a cordon and search operation on Tuesday night.

The official said the search operation was halted for the night but the forces maintained the cordon to stop the militants from escaping.

The operation was resumed in the morning and the gunfight started after the trapped terrorists opened fire on the forces, which was responded to, he said.

Firing was going on when last reports came in, the official said.