New Delhi, Two suspected terrorists were gunned down and one was arrested while two managed to escape after a dramatic shootout in a congested Muslim majority locality in south Delhi Friday.

The gun battle that started at about 10.30 in Jamia Nagar near the Jamia Milia University went on for about one-and-a-half hours during which the suspected terrorists were holed up inside a fourth floor apartment.

A huge cache of weapons was recovered from the house and an inspector of the Delhi Police was hurt, police said.

Of the two terrorists shot dead, one has been identified as Atish. The man arrested has been identified as Saif, a police official disclosed.

Police, helped by commandos of the elite National Security Guard (NSG), surrounded the house L-18 in the rabbit warren of the Jamia Nagar neighbourhood after a tip off following a reported confession by a leading militant who was arrested after the July 26 Ahmedabad bombings.

Said Karnail Singh, joint commissioner, Special Cell: "There were a total of five people at L-18. Two have been shot dead, one has been arrested while two have managed to escape."

Added an eyewitness and resident of the area, Maseer Alam: "There was firing for the last two hours. I saw two people being shot but their faces were covered soon after."

There was tension in the narrow bylanes of Jamia Nagar with shops downing shutters and more than 5,000 police personnel being deployed. Angry residents were out on the streets with some saying that police had staged a "fake encounter".

The shootout comes six days after serial blasts struck the heart of the capital's busiest markets killing 24 people and injuring over 100.

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