Police said the encounter started around 7 am.
Four terrorists have been killed during an encounter after security forces intercepted a truck they were travelling in on the outskirts of Jammu this morning, police said.
Police said the truck has caught fire in the gun battle and fire tenders were called to douse the fire.
"There was unusual movement of a truck in the area. Police stopped the truck at check post. As security forces started searching the truck, terrorist hiding inside fired at security forces. All the terrorists were killed in retaliatory fire," said Mukesh Singh, Additional Director General of police Jammu.
Mr Singh said the truck driver has managed to escape and a search operation is on to track him.
A huge cache of arms and ammunition has been recovered from the burnt truck.
According to Mr Singh, seven AK rifles, one M4 carbine, three pistols and other ammunition was recovered. He the truck was going to Srinagar from Jammu.
Soon after the encounter, the entire area was sealed off and traffic along the highway was stopped.
Police said the encounter started around 7 am.
Yesterday, a major terrorist attack was averted in Udhampur near Jammu after a 15 kg improvised explosive device (IED) was defused by police.
Officials said a major terror plan was averted when the cylindrical shaped IED, 300-400 grams of RDX, seven 7.62 mm cartridges and five detonators were recovered in Basantgarh area.
Police also recovered a coded sheet and letter pad page of terrorist organisation Lashkar-e-Taiba (LeT) and detained a suspect.