The exchange of firing with the militants took place after the police party raided a house near the filter plant in Manghopir area on a tip off from intelligence agencies, said Rao Anwar, Senior Superintendent of Police.
The militants belonged to the Tehreek-e-Taliban Swat group and were planning terrorist attacks on foreign nationals and senior police officials in Karachi, Anwar said.
"We have foiled a big terrorism bid and two of our policemen were also wounded in the exchange of firing," Anwar said.
"We have also recovered large cache of explosives, arms and ammunition from their possession," he said.