LeT has been trying to make inroads into the country's hinterland and had sought recruits from various parts of the country.

Police and army were maintaining a studied silence over this encounter officially but they acknowledged that this development was alarming.

The encounter comes close on the heels of intelligence reports suggesting that the banned SIMI had begun preparing itself for "participation" in the Indian Mujahideen offensive in December 2007 when nearly 40 of its members participated in a militant training camp held near Aluva, Kerala.

Earlier in February this year, Mohammed Yahya Kammukutty, 31, hailing from Mukkom in Kozhikode district of Kerala, was arrested as part of a continuing probe into a SIMI network in Karnataka that has already lead to the arrest of six youths from northern Karnataka, including four medical students.