Border guards, meanwhile, went on high alert following waves of militant attacks in the insurgency-wracked region that have left 40 people dead since Sunday, a police spokesman said.

Police attribute the explosion of violence to revenge attacks by rebels fighting Indian rule in Kashmir after their commander was gunned down by troops on Saturday.

The body count has since risen -- five on Sunday, 16 on Monday and 15 on Tuesday, according to police figures.

Police gave no further details about the three rebels killed early Wednesday but a spokesman added that a Border Security Force guard was injured in an overnight attack by rebels on their patrol in Srinagar.

The clash between a group of seven militants and the security forces in the Kathua border district, 85 km east of Kashmir's winter capital Jammu, continued until mid-afternoon Wednesday, police said.

In the intense gunbattle, a security force official was killed and three others wounded, police said.

By mid-afternoon, after a heavy barrage of gunfire from both sides, the rebels' guns suddenly fell silent and police launched a search operation to determine whether they had been killed or had escaped into the forest.

Operations against the militants began Tuesday afternoon when police noticed seven men in army fatigues near the heavily-forested village of Gatti.

When challenged, the rebels took cover in the forest as authorities rushed in paramilitary and army reinforcements to tighten a police cordon, a police official said.