Early on Saturday a group of militants hurled grenades and used heavy volume of automatic gunfire to enter the Sunjuwan Military Station in Jammu.
Local people told journalists that gunshots were heard inside the camp and the area was later cordoned off by the Indian forces.
No hostage crisis has been declared in Jammu and Kashmir's Sunjwan army camp, and the search and combing operation in underway, in the aftermath of a militant attack.
Those injured included a Colonel rank Army officer, Havaldar Abdul Hamid, Lance Naik Bahadur Singh and daughter of Subedar Chowdhary.
While the minister did not specify the group affiliation of the militants who launched the attack, officials said Jaish-e-Mohammed militants were behind the terror strike.
In the exchange of firing, junior commissioned officer (JCO) Ashraf Mir and non-commissioned officer (NCO) Madan Lal Chaudhury, who belonged to J&K, lost their lives.
IGP Jammu SD Singh Jamwal said that suspicious movement was noticed by a sentry of Sunjwan army camp around 4:55 am. The 2001 Parliament attack convict was hanged inside Tihar Jail and buried there on 9 February, 2013. The fire was retaliated.
"Operations will continue till all the terrorist are apprehended or killed", he added.
The complaint from the children also mentioned that the administration, which is being assisted by the Army, had "failed to safeguard the human rights of the members of the armed forces". "Before the final assault on the terrorists, we are making sure that no civilians are harmed in this operation", the statement said.
Officials said an unknown number of attackers is cornered inside the residential complex of the camp, where they are locked in a fierce standoff.
This time too, the security agencies were expecting an attack along the LoC or the International Border but not so close to the Jammu city. Chief minister Mehbooba Mufti visited the military hospital in Satwari to meet the injured.
"The DGP has apprised him of the situation".