Irate crowds clashed with the security forces at several places in the area during and after the encounter. "We lost two officers and three army personnel were injured".
"As the security forces came close to the house where the terrorists were hiding, they were fired upon, triggering an encounter", said the police official.
On Wednesday, three terrorists have been killed in an encounter at Tral in Pulwama, Jammu and Kashmir.
Giving a major jolt to terror group Hizbul Mujahideen, Indian forces on Sunday gunned down Yasin Itoo alias Mehmood Ghaznavi, a self-styled operations commander of the terror group, PTI reported.
A police official said a body was lying at the encounter site.
The gunfight also left two soldiers dead while unknown number of militants reportedly escaped from the spot. Earlier, one soldier was injured in a terrorist attack on an Indian Army camp in Kupwara region of J&K in the wee hours of the morning.
Security forces suspecting the presence of terrorists, search operation has begun in Awneera village of Shopian in Kashmir valley on Saturday.
Police said the firing stopped late in the night but resumed early Sunday, when three rebels were killed.
Seven civilians sustained pellet injuries.
The two martyred were identified as Sepoy Ilayaraja P, a resident of Tamil Nadu, and Sepoy Gawai Sumedh Waman from Maharashtra.
Residents said that locals rushed out of their homes to protest and pelt stones on the forces as soon as firing started.