A defence spokesperson in a statement said three terrorists had so far been killed in the ongoing operation.
A group of heavily armed men struck the sprawling camp of the 36 brigade of the Jammu and Kashmir Light Infantry before dawn yesterday. Five Army men, including two Junior Commissioned Officers (JCOs), were killed in the attack.
The spokesperson said the third terrorist was also found wearing Army combats and was heavily armed like the other two.
A senior police official had earlier said that four terrorists were killed by security forces.
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A JCO and a jawan were killed yesterday.
The spokesperson said during sanitation of residential quarters by the Army commandos, bodies of another JCO, two jawans and an elderly man, the father of a soldier, were recovered.
All six of them had been killed by the terrorists in the initial stage of the attack yesterday.
Ten people, including six women and children, were injured in the attack, the spokesperson said.
A 14-year-old boy had suffered a gunshot wound to the head and was in a critical condition.
The sanitation and search operations were underway.
"The operation is on and the evacuation (of people from the family quarters) is in progress," Jammu-based Army PRO Lt Col Devender Anand told PTI.
He said a number of families were still in the camp and the Army's aim was to ensure their safety.
"There has been no firing since last night," the officer said.
On November 29, 2016, terrorists had stormed the Army's Nagrota camp on the outskirts of the city, killing seven Army personnel, including two officers. Three terrorists were gunned down in the operation.
The terrorists had struck before dawn yesterday and managed to sneak into the camp from the rear end of the base after a brief exchange of fire with the sentry guarding the periphery.
"The terrorists entered the family accommodation complex after which quick response teams cordoned off the area and isolated the terrorists, who are holed up in a few houses (inside the camp)," an official said.
Contingents of CRPF and police were posted outside the boundary wall and were keeping curious onlookers at bay to prevent civilian casualties.
A high alert has been sounded in Jammu and security beefed up in and around the city.
Intelligence inputs had warned of an attack on an Army or security establishment by Jaish-e-Mohammed in view of the death anniversary of Afzal Guru, who was hanged on February 9, 2013, for the 2001 attack on Parliament House.