The two rebels had fled to the mosque after soldiers raided their hideout in northern Bandipora town late Sunday, sparking a gunbattle in which a soldier was killed and two others were injured.

Skirmishes continued through the night, during which the militants had left the mosque and taken up positions in an adjoining house, said R.K. Bhargva, deputy inspector general of the paramilitary Border Security Force (BSF).

Several houses were damaged during the fighting in which both sides also used grenades.

"The fighting has stopped and we have recovered two bodies from one of the damaged houses," Bhargva said, adding both were militants.

Bandipora is part of Baramulla district bordering the Pakistani zone of divided Kashmir.

In another incident, police Monday shot dead two militants near the Mughal-built Harwan gardens in Srinagar, a spokesman said, adding a policeman was also hurt in the clash.

Another rebel was killed by Indian troops in southern Doda district, while suspected militants shot dead a civilian in the same district late Sunday, police said.

Violence has surged in the region over the past few months.

At the weekend, 12 suspected militants were shot dead after they infiltrated into Indian Kashmir from the Pakistani zone. India accuses Pakistan of arming and funding Kashmiri rebels, a charge it denies.

The arch-rivals both claim Kashmir in full and have fought two of their three wars over the scenic Himalayan region.

Since January 2004 they have been engaged in a peace process to resolve all their pending disputes, including over Kashmir.

The insurgency against Indian rule in Kashmir launched in 1989 has left more than 44,000 people dead, by official count. Rebels and separatists say the toll is at least double that number.