One terrorist holed up in a hotel building and a CRPF constable were killed as the fierce gunbattle between the security forces and militants continued in Sopore town of Baramulla district for the third day on Saturday.
A total of 10 CRPF and police personnel have been injured in the encounter which has been going on since Thursday.
Efforts are on to neutralise the other ultra, a senior police official said.
The two terrorists dressed in police uniform had taken position in Sopore's New Lite hotel after making an abortive bid to storm a security forces camp on Thursday.
One of them was killed after the security forces managed to occupy three upper floors of the five-storeyed hotel after a prolonged gunfight in a bid to zero in on the ultras whom they expected to be hiding either on the ground or first floor of the building.
Six security personnel have also been injured so far in the the continuing gunbattle. Two CRPF jawans were injured in the initial attack while four more personnel including two policemen were injured in the exchange of fire yesterday.
Although security forces have occupied the three upper floors of the building and cordoned off the area, the operation of liquidating the militants has been difficult as the hotel is located in a densely populated area, officials said adding all efforts were made to ensure there is no collateral damage.