The militants, all wearing army fatigues, lobbed grenades and opened fire at the Hiranagar police station, around 200 kilometres (126 miles) from the main city of Srinagar, an officer in the police control room said.

"We can confirm that five policemen and two civilians have been killed in the attack," the officer told.

The attackers escaped after hijacking a truck and were now engaged in a fierce gunbattle with Indian troops in the Samba district of Kashmir, Indian media reported.

It was not immediately clear how many militants were involved in the attack.

The attack will cast a shadow over an expected meeting this weekend between Indian Prime Minister Manmohan Singh and his Pakistani counterpart Nawaz Sharif on the sidelines of the UN General Assembly in New York, the first such top-level talks in three years.