Militants on Wednesday evening attacked a Central Reserve Police Force camp in Srinagar, injuring six soldiers.
The posh Rajbagh Colony reverberated with explosions and gunfire as the militants lobbed grenades and rained bullets on the 69th battalion of the CRPF camp.
Reinforcements were rushed to the spot and the area around the CRPF camp was cordoned off, police said.
"Intermittent firing is continuing. Soldiers have taken position in the locality and no movement is being allowed," a local resident reached by phone said. "There is tension in the area. We have taken refuge in ground floor."
The Al-Mansoorain militant outfit phoned a local news agency to claim responsibility for the attack.
This is the second attack in Srinagar in less than a week.
Last week two suicide attackers stormed a heavily guarded company headquarters of the CRPF in the world famous Dal Lake.
Five troopers and two militants were killed in the eight-hour gun battle.
The CRPF chief in Kashmir, Inspector General S S Rawat had said in the morning that security around all the camps was further beefed up following last week's attack. "We have taken measures, but let me tell you that the initiative is with fidayeen."
Rawat said more than 36 battalions of the CRPF were deployed in Kashmir to "quell the militant activities and also maintain law and order".
"CRPF has also been assigned the duties of guarding vital installations and providing security cover to VIP's apart from counter-terrorism role."