The gunfight erupted in Dodhipora village, some 75-km from here, when a joint team of police and Rashtriya Rifles launched a search operation to flush out hiding militants, a police spokesman said.
Security forces confronted the ultras and in the ensuing gunbattle, two LeT ultras and a policeman were killed, he said.
The slain militants were identified as Mudasir Sheikh alias Mavia, a self-styeld district commander, and his Pakistani associate Tamim.
"Both the militants were involved in an attack on a prominent hotel on the outskirts of Srinagar last October," the spokesman said.
Two hotel employees were killed when militants opened fire on Silver Star hotel and an army convoy passing through Lasjan bypass on October 19.
On December 19, six hardcore LeT militants were killed in a gunfight with security forces in Sopore town in north Kashmir's Baramulla district.