District Police Officer Swabi Javed Iqbal told reporters that the terrorist was killed when police raided a house in Gadoon Amazai area of Swabi district after credible information about the presence of terrorists.
Terrorists opened fire on the police team and constable Muhammad Javed died while sub-inspector Muhammad Tariq and Frontier corps personnel Muhammad Sajjad sustained critical bullet wounds. They were shifted to Peshawar for treatment.
In retaliation, he said police shot dead a terrorist identified as Anwar Sayed wanted in cases of terrorism.
A search operation was conducted after the encounter during which dozens of suspects were taken into custody.
Separately, at least 42 suspected people including 19 undocumented Afghan nationals were arrested during search operation in Hayatabad area of Peshawar district bordering Khyber Agency. Drugs and arms were also recovered from some of the suspects.
Pakistan has intensified crackdown against illegal Afghan nationals in parts of Khyber Pakthunkhwa province after it decided not to allow any foreigner to stay in the country without valid documents.