While an exchange of fire took place on Tuesday morning, there was no casualty.

"We are adopting a wait and watch strategy in view of the heavy fog, dense forest and cave-type hideouts providing a major shield to terrorists hiding there. We have put entire area under cordon and choked their supplies," a senior army officer of 16 Corps said.

"Let us see how long they can survive without food and water. They will be forced to come out and fight or surrender," he said.

Owing to the heavy winter fog, thick vegetation and difficult terrain conditions, the operation is being undertaken with due care and precautions, he said, adding "we do not want to have any casualty on our side at all."

Reports available with the security forces suggested that there were about seven militants trapped in the area out of which four have been killed, he said. Three security force personnel have also laid down their lives.

The ravine-like terrain along with several natural caves are providing cover for the ultras, he said, denying presence of any fortified bunkers in the area.

"The militants have reportedly stored food. We got some literature and provisions from those places. They (terrorists) had a tin sheet and covered it with earth to convert it into a shelter. Because of these ravines and dense forests, it is a difficult operation and the poor visibility is causing hindrance," said Poonch range DIG Kamal Saini.

The encounter began at 1600 hours on January 1 and is still continuing, the army officer said, adding "continuous assaults were being launched in the cave-type hideouts to neutralise the terrorists."

The intercepts decoded by the army have revealed that some top commanders of Jaish-e-Mohammad, al-Badr and Lashker-e-Taiba are holed-up in the hideouts, he said.

"We will not allow them to escape from the spot. The operation will finish after the recovery of their bodies," the officer said.

Apart from Romeo Force's 29th unit and 26 Rashtriya Rifles and Special Operation Group of Jammu and Kashmir police, authorities have rushed para units of special forces to the area besides some additional troops.

Seven persons, including three security men – JCO Subedar Rakesh Kumar, Naik P K Singh and Special Police Officer Naresh Kumar – have lost their lives.

Four ultras were killed but their bodies have not been recovered so far, Northern Command spokesman Col D K Kachari said.

Police have also arrested a retired assistant sub-inspector Muzaffar Shah from Bhati Dhar for allegedly helping the militants in taking shelter in the area.