Indian police say they have killed a senior Maoist leader during a battle with the rebels in a densely forested region of the southern state of Andhra Pradesh.

Cherukuri Rajkumar, commonly known as "Azad," was reportedly shot dead on Friday as he was trying to cross into the neighbouring state of Maharashtra, P Pramod Kumar, a senior Andhra Pradesh police officer said.

But Maoists denied the claim and said that Azad, a member of the group's central committee, was killed in police custody.

In a telephone call to journalists, Gudsa Usendi, a spokesman for the Maoists, accused police of killing Azad after capturing him a day earlier in the forest, nearly 300km north of Hyderabad. 

Associated with the Maoist movement for more than 35 years, Azad was allegedly involved in attempts on the lives of two former state chief ministers, and carried a reward of 1.2 million rupees ($25,000) on his head.

'Greatest internal threat'

His killing came days after the Maoists shot dead 26 membersof the paramilitary forces in an ambush in the eastern state of Chhattisgarh.

Maoist rebel groups have fought for decades throughout east and central India against government rule.

Last year, the Indian government launched a major offensive to tackle the worsening left-wing insurgency, but since then the Maoists have hit back with a series of high-profile attacks.

Manmohan Singh, India's prime minister, has called the Maoists the country's greatest "internal security threat".

The rebels say they are inspired by the late Chinese communist revolutionary leader Mao Zedong.

They have tapped into the rural poor's growing anger at being left out of the country's economic gains and are now present in 20 of India's 28 states. They have an estimated 10,000 to 20,000 fighters.