Security forces engaged with militants holed up in a hotel in Srinagar's [Images] city centre prepared to storm the building after having established contact with the attackers, a senior police official involved in the operations said on Tuesday.

Two CRPF personnel and two civilians were killed and 13 others, including a foreign journalist, were injured when militants hurled a grenade and began firing at the CRPF forces posted in the area on Monday afternoon, triggering the gun-battle.

The two militants are firing at the security forces, Srinagar Deputy Inspector-General H K Lohia said.

He said the forces were going to storm the building in a bid to neutralise them.

Earlier the forces resumed the operation after a overnight lull and managed to rescue three civilians from the from the hotel.

CRPF DIG J N Ojha said the operation to flush out militants was suspended on Monday night to avoid civilian casualties as many people are believed to have been trapped inside hotels and other buildings nearby.

"Once it is ensured that no civilian is inside, security forces will resume the operation to flush out the militants," he said.