Three men who slipped across the border from Pakistan into Kashmir disguised as policemen have been killed by security forces after holding nine people hostage in a house in the Hindu-majority region of Jammu, police said.

The three men killed two civilians and an army officer, before forcing their way into the house where they killed three hostages before being shot dead on Tuesday, officials said.

"The hostage crisis is over, all three militants have been killed," Manohar Singhpolice officer  said.

One injured hostage was rushed to hospital, but the fate of the remaining hostages was not immediately known.

Earlier in the day, Indian security forces opened fire on Muslim protesters demanding the end of New Delhi's rule in Kashmir, killing two people, officials said.

"The security forces had to fire when protesters hurled stones and defied a curfew in Handwara," a police spokesman said of the first death.

He said in the ensuing clashes five security personnel were injured.

Another Muslim man was killed in central Budgam district when protesters also targeted security forces with stones, police said.

Protests this month have rocked the state of Jammu and Kashmir, sparked by a land row that has led to massive pro-independence demonstrations in the Muslim-majority Kashmir Valley and strikes in the more peaceful Jammu region.

Strained relations

The crisis has strained relations between India and Pakistan, which both claim the region in full but rule it in parts, damaging a tentative peace process and raising fears Kashmir could again become a hotspot between the two nuclear powers.

Police killed five protesters who defied the curfew in the Kasmir valley [AFP]

Thousands have died in the two-decade old insurgency against Indian rule.

In India's Kashmir valley, authorities have imposed a curfew this week to defuse protests by Muslim separatists.

Police on Monday killed five protesters who defied the curfew bringing the death toll to at least 28. The demonstrations are the biggest against Indian rule since a revolt broke out in 1989.

More than 600 people have been injured in clashes over the past two weeks.

Residents in the Kashmir valley said they were running short of food and essentials due to the four-day long curfew.

"There is nothing left to eat now except a little rice," Rabia Noor, a 35-year-old housewife who lives in Srinagar, told Reuters by telephone.

Security forces threw barbed wire coils across roads in the valley and federal police are patrolling the deserted streets in Srinagar.

"The valley looks like a big prison," said 24-year-old Mohammad Usman, a university student.

Authorities have detained four senior separatist leaders since Monday to defuse protests and raided the homes of another dozen leaders.

Land promise

The crisis began after the Kashmir government promised to give land to a Hindu trust that runs Amarnath, a cave shrine visited by Hindu pilgrims. Many Muslims were enraged.

The government then rescinded its decision, which in turn angered Hindus in Jammu who attacked trucks carrying supplies to Kashmir valley and blocked the region's highway, the only surface link with the rest of India.

Challenging the blockade, Kashmiris took to the streets.

In the Kashmir valley, the protests have tentatively united a disparate group of separatists such as the All Parties Hurriyat (Freedom) Conference, which condemns militant violence, and the breakaway group of hardliner Syed Ali Shah Geelani, for years seen as marginalised.

Tens of thousands of people have been killed in Kashmir since armed revolt against New Delhi's rule broke out two decades ago.