The Press Trust of India news agency quoted unidentified police officers as saying that the three killed fighters belonged to the Pakistan-based Lashkar-e-Toiba outfit - one of several groups that have been fighting since 1989 to end Indian rule in disputed Kashmir.

The report said the men were killed in the Uttam Nagar district in southwest New Delhi. It did not give other details, and there was no independent confirmation.

PTI also said police separately arrested two suspected fighters and recovered 10 kilograms of explosives and AK-47 assault rifles.

Aaj Tak television news channel said the separatists were on their way to the northern town of Dehra Dun where they planned to attack a military training academy.

Dehra Dun in Uttar Pradesh state is 245km north of New Delhi.

Kashmir is the main flash point between India and Pakistan, which have fought two wars over control of the Himalayan territory.

India accuses Pakistan of funding and training the fighters. Pakistan says its supports their cause, but denies giving them material aid.