Security forces were conducting search operations in Puchal area at Awantipora when shots were heard from nearby Goripora village, a police official said.
He said reinforcements were immediately rushed to Goripora and a cordon was laid around village to prevent the militants from fleeing.
The militants opened fire at security forces, who returned it. A fierce exchange of fire is still on, the official said.
"According to initial inputs, three to four militants are trapped in the cordoned area," he said, adding, no casualties have been reported from either side so far.