Arms and ammunition have been recovered from the terrorists. Their identity and affiliation are being ascertained.
The encounter broke out on Monday morning in the Achabal area in Anantnag district of Jammu and Kashmir.
A Major-rank officer has been killed while another officer of the same rank and two soldiers have been injured, officials said.
The injured have been rushed to the 92 base hospital of the Army in Srinagar, they added.
Security forces launched a cordon-and-search operation in the area this morning, acting on credible inputs about the presence of militants in Achabal area of the south Kashmir district.
The search operation turned into an encounter after the militants fired on the forces, who retaliated, the official told.
However, the incident comes after five Central Reserve Police Force (CRPF) personnel were killed and three others were injured when their patrol party was attacked by terrorists in Anantnag on June 12. Among those who were killed include ASI Ramesh Kumar (Jhajjar, Haryana), ASI Nirod Sarma (Nalbari, Assam), CT Satendra Kumar (Muzaffarnagar, Uttar Pradesh), CT Mahesh Kr Kushwaha (Gazipur, Uttar Pradesh) and CT Sandeep Yadav (Dewas, Madhya Pradesh).
Earlier on Friday, two Lashkar-e-Toiba (LeT) militants were killed in an encounter with security forces in Pulwama district of Jammu and Kashmir. Based on inputs, security forces launched a cordon and search operation in Braw Bandina area of Awantipora in south Kashmir's Pulwama district, a police spokesman said. As the forces were conducting searches in the area, the militants fired upon them, he said, adding that the forces retaliated. The slain militants were identified as Irfan Ahmad Degu alias Abu Zarar, a resident of Naina Litter Pulwama, and Tasaduk Amin Shah of Kadlabal Pampore, the spokesman said. Both of them were affiliated with proscribed outfit LeT and were wanted by law for their complicity in terror crimes, including attack on security establishments and civilian atrocities, he said.
(With inputs from agencies)