"As the forces approached the suspected spot, the hiding militants opened fire, triggering off an encounter", said an official.
"The militants fired upon a joint party of police, army and paramilitary troopers who were deployed at a crossing to check the movement of vehicles".
They said the injured soldier later succumbed to injuries. A police spokesman confirmed the death of two militants and added that the operation was still under way. The operation has not been called off yet, Pani said.
A senior police official said a militant hideout has been unearthed while the search operations in the area were still in progress.
"The slain militant has been identified as Muzamil Ahmad of Yaripora village of Kulgam district".
The security forces had also launched a cordon and search operation in Laam forest area of Tral in south Kashmir's Pulwama district on Tuesday following reports about presence of militants there.
A police official said Bhat was from the volatile Palhalan area.
Authorities snapped internet services in Kulgam and adjoining Anantnag district after the incident. The security personnel retaliated, resulting in the encounter in which two militants were killed. According to a police spokesperson, "The operation turned into an encounter".