The encounter in Zonreshi village started yesterday when army launched a search operation following information about presence of some terrorists there, Defence spokesman said today.
He said as the Army commenced the search of a suspect house, the hiding militants resorted to a "heavy volume of fire" and threw grenades.
"Despite the disadvantage of being fired upon by terrorists from the upper floor of the house, the soldiers immediately retaliated the fire," he said.
The operation, which concluded today, led to elimination of five terrorists, the spokesman said, terming it as "yet another major blow to the terror outfits".
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"Two Army soldiers also attained martyrdom", he said. They were Naik Shinde Shankar and Gunner Sahadev Maruti More.
Police said four army personnel including a Major, were injured in the operation. The injured have been admitted to a military hospital in Drugmulla.
The defence spokesman did not spell out the identity or group affiliation of the slain militants but police sources said they were likely from LeT.
The Army spokesman said the force "lost two of its gallant soldiers who were the leading scouts and despite bearing the brunt of the initial volley of fire, stood their ground for each other and the rest of the search team".
Northern Army Commander Lt Gen D S Hooda expressed his condolences to the families of the two soldiers.