One terrorist, who had managed to flee from the encounter site, was also arrested by the police from a maternity hospital of Anantnag district of South Kashmir, the police said.
The encounter broke out on Monday afternoon when the terrorists opened fire on an Army convoy, on its way to Srinagar, in Qazigund on Jammu-Srinagar national highway. One soldier was killed in the attack while another sustained injuries.
The security forces cordoned off the area and launched a hunt for the terrorists. The search operation turned into an encounter with the terrorists, which ended at 2 AM this morning, the police said.
The police identified the dead terrorists as Yawar Basir, a local, and Abu Furqan and Abu Maviya - both foreign terrorists. Basir, hailing from Habiash of Kulgam, joined ranks with Lashker-e-Taiba this year in February after snatching weapon from a policeman.
Furqan had taken over as the head of Lashker-e-Taiba in South Kashmir after the death of Abu Ismail, who had led the attack on Amarnath pilgrims in July this year.
Police said that all the three terrorists, killed today, were part of the squad that carried out the attack on the pilgrims on July 10.
Eight pilgrims were killed and 19 others injured.
Police said the group, headed by Furqan, was involved in a series of terror crimes in Anantnag and Kulgam area, which included the Yatra Bus Attack case at Bantingo, few attacks on security forces at Lower Munda on the national highway, attack on police party at bus stand in Anantnag.
Furqan had replaced Ismail in South Kashmir and was responsible for the recent attacks carried by the LeT, police said.
Pursuing the leads available at Qazigund encounter, one individual Rashid Ahmed Allai of Hamzapora sangam Bijibehera was arrested from Janglatmandi maternity hospital with a Chinese pistol and live cartridges last night. He was missing since last two days from his house and had joined the Yawar group of LeT.
The police said that he was part of the terrorist group when they carried out attack on army at Qazigund on Monday but managed to escape from the site when the encounter broke.
He had taken shelter at the hospital in Anantnag with the help of one of his associate.
According to the police, he along with his associates, were intending to snatch weapon from the policemen by attacking them.