BHOPAL : Indian police gunned down eight militants on Monday after they escaped from a high-security jail by slitting the throat of a prison guard and scaling the walls with knotted bedsheets.

Members of the banned Students Islamic Movement of India (SIMI) had staged the breakout from the prison in Bhopal by attacking and murdering the warder with sharpened prison-issue steel kitchen plates in the middle of celebrations to mark the Hindu festival of Diwali.

Police said they were later cornered on the outskirts of the city in the central state of Madhya Pradesh but resisted efforts to take them back into custody and were subsequently shot dead.

"We asked them to surrender but they tried to break the police cordon," Yogesh Choudhary, Bhopal's inspector general of police, told AFP.

"They were unarmed but attempted to attack the police with stones. We had to shoot them."

Choudhary, however, later told reporters that "they had weapons and cross-firing took place".

TV images showed crude pistols lying next to the bodies, arousing scepticism in some quarters about the police version of events.

"Security forces have the right to use proportionate force to save lives, but it appears in this case that the suspects may not have been armed," Meenakshi Ganguly, South Asia director for Human Rights Watch, told AFP, adding the incident should be investigated.

The Bharatiya Janata Party, which rules nationally and in Madhya Pradesh state where the prison is, slammed the opposition Congress party, saying it would "meet its own political Waterloo" after a spokesman questioned whether the incident was a staged confrontation.

After using their sheets to climb and descend several walls inside the prison, the inmates made their way on foot to a village 15 kilometres (10 miles) south of the city centre, despite a massive search.

Police said local residents had alerted them about suspicious movements in the village, leading to the raid late morning.

- Prison boss suspended -

The home ministry had earlier issued a nationwide red alert over the jailbreak, while police had released mugshots of the prisoners.

Police insist there was no breakdown in security at the prison, a supposedly maximum security facility which has a round-the-clock electronic surveillance system.

However four officials, including the prison's superintendent, have been suspended and an inquiry launched into the escape.

Madhya Pradesh's Chief Minister Shivraj Singh Chouhan told reporters the breakout posed a threat to national security and authorities swiftly mobilised all law enforcement arms to track the fugitives.

He said the National Investigation Agency had been asked to open an inquiry into the breakout and anyone found to have acted incompetently would be prosecuted.

Most of the inmates had been awaiting trial for "terror-related activities, sedition and robbery" for more than three years, although two of them had only been detained since February.

The breakout happened on the night of Diwali, a major Hindu festival when revellers traditionally set off fireworks which can shroud the night skies.