The two rebels, both identified as members of the largest rebel group, Hizb al-Mujahidin, were killed in a four-hour gunbattle overnight at Mahore in the southern Udhampur district, police said.
In the town of Anantnag, two policemen were injured in a grenade attack, police said.
Violence has continued in Kashmir despite calls by some
separatists for rebels to call a truce after India and Pakistan
entered a 26 November border ceasefire in the divided territory.
Pakistani President Parvez Musharraf and Indian Prime Minister
Atal Behari Vajpayee met on Monday on the sidelines of a seven-nation summit in Islamabad, in the rival leaders' first talks since coming close to war over Kashmir in 2002.
Indian troops have stepped up patrols at important installations across Kashmir, fearing attacks by rebels opposed to any concessions to India.
"We have been told to remain on high alert," a border guard soldier said in Srinagar, the summer capital.
Suspected rebels attacked the region's main railway station on Friday on the eve of the summit, killing five security personnel
before troops shot and killed the two attackers.
More than 40,000 people have died in Muslim-majority Kashmir since the eruption of the anti-Indian insurgency in 1989, according to official figures.
Separatists put the toll between 80,000 and 100,000.