New Delhi - At least two suspected Islamic militants wanted in connection with recent bombings in Indian cities were killed by the police in national capital New Delhi on Friday, officials and news reports said.

The gunbattle erupted after the militants holed up inside a flat in the Muslim-dominated Jamia Nagar area in southern Delhi fired on a police team conducting searches in connection with the blasts.

"Two militants, including Asif, alias Bashir, and the second whose identity we are verifying were killed in an hour-long encounter with the Special Cell of the Delhi police," police spokesman Rajan Bhagat told reporters.

Another militant, whose name was given as Saif, was arrested while two other rebels escaped. Two policemen were injured in the shootout and were moved to hospitals, Bhagat said.

The police declined to specify the group the militants belonged to or whether the encounter was in connection with the September 13 bombings in New Delhi markets that claimed 24 lives.

"We cannot say anything about that yet since investigations are still on," Bhagat said adding that the police recovered a huge cache of arms and ammunition from the militants.

But media reports said the slain militants belonged to the banned Students Islamic Movement of India (SIMI) as well as the Bangladesh-based Harkat-ul-Jehadi-e-Islami
(HuJI).

Quoting police sources, the PTI news agency reported that the militants were involved in the Delhi blasts and the July 26 blasts in western Ahmedabad city which killed 56 people.

The report said police raided Jamia Nagar after Abu Bashar, a militant involved in the Ahmedabad blasts confessed that he had stayed in the area with SIMI activist Abdul Subhan Qureshi alias Tauqir, the mastermind of the Delhi blasts.

The Indian Mujahideen, a front for the banned SIMI had claimed responsibility for bombings in cities of Jaipur, Ahmedabad and Delhi earlier this year.

The group said it had declared an "open war" against India for atrocities committed against Muslims and the country's support of US policies.

Meanwhile, five Jamia Nagar residents were detained for harbouring militants and questioned by police.

"I had just come out of my house when I heard gun-shots whizzing in the air. Frightened, I rushed back inside," a witness told local news channels.

"The firing went on for nearly one and a half hour. Later, I saw bodies of two militants, faces covered with cloth being taken out of the building," he added.

The Indian capital was placed on high alert as police and security agencies intensified search operations to hunt the escaped militants.

Nearly 5,000 police were deployed in the Jamia Nagar which was cordoned off.

Exit points on Delhi borders were also sealed as police stepped up vigil in the city, suspecting that militants could carry out more strikes in the Indian capital. (dpa)