The cave, situated at an altitude of 11,000 feet, was discovered by Khurshid Ahmad Chopan a few days ago.
Chopan claimed that the place had come in his dreams and a spiritual person had guided him to the cave.
"Lord Shiva and this cave were coming to my dreams for the last couple of days... Finally I climbed the mountain and discovered the cave at Krawa belt," Chopan told PTI.
"I discovered the natural cave with three 'Shiva Lingams', other smaller idols, coins dating back to 1896 and some broken earthen pots in the upper reaches of Krawa village in Banihal," he said.
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"Police should immediately cordon off the area to restrict people's movement at the site," Qadri said.
Meanwhile, All Party Migrant Coordination Committee (APMCC), an apex body of displaced Kashmiri Pandits, have decided to go to the cave on the first day of Navratra.
"We are very happy over the discovery and thank the shepherd for his initiative," APMCC Chairman Vinood Pandit said.