Police sources said that acting on an inputs about the presence of militants, the forces cordoned off Syed Ali Akbar locality of Fateh Kadal early this morning.
They said that the militants fired on the forces triggering a gunfight.
In the ensuing encounter, they said three militants and a policeman were killed. The identity of the slain militants was being ascertained.
Meanwhile, violent protests broke out near the encounter spot and adjoining Karfali Mohalla against the conduct of anti-militancy operation, witnesses said.
CRPF troopers and police, they said burst tear smoke shells and fired pellets to chase angry protesters who were hurling rocks at the government forces.
The clashes were going on when the last reports came in.