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They said the intermittent firing continued throughout the night as security forces further tightened the cordon around the target house.
Intense firing was reported from the scene when security forces attempted to storm the house this morning, the officials said, adding there was no report of any fresh casualty.
The encounter broke out around 2 pm on Monday when the joint troops of police, Army and CRPF zeroed in on the house where the terrorists had taken shelter at gun-point during the intervening night of Sunday and Monday.
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The identity and group affiliation of the slain terrorists would be known once the operation is over, the officials said.
The border district of Poonch along with nearby Rajouri has witnessed several encounters this year, resulting in the killing of around 20 terrorists and 10 security personnel.
Most of the terrorists were killed while attempting to sneak into this side from across the border, the officials said.