The Counter Terrorism Department (CTD) conducted a raid on Wednesday night based on intelligence reports about the location of eight militants of a banned organisation near Sheikhupura.
The militants present in the area opened fire at the CTD team, and four terrorists were killed in the ensuing shootout. Four other militants managed to escape from the scene.
The bodies were shifted to a hospital for medico-legal formalities, and a search for the escaped militants is ongoing.
The CTD personnel also recovered three kilograms of explosive material from the possession of the dead.
Police say that the suspects were planning to conduct an attack an oil depot.
