SRINAGAR - Three suspected rebels disguised in army uniforms hijacked a taxi in Indian-held Kashmir on Friday and killed three people before being shot dead by security forces.

The attack was the deadliest in months by rebels fighting Indian rule in the disputed Himalayan territory and came just ahead of India's general elections in which Kashmiris are slated to vote.

The gunmen seized the shared passenger taxi early Friday morning near the international border with Pakistan in the south of the scenic territory, police said.

The dead included the driver of the vehicle hijacked by the gunmen near Dayalchak, 340 kilometres from Srinagar. A passenger and a soldier also lost their lives.

The gunmen dressed up in army uniforms fired at the jeep used as a shared taxi to ferry people between towns and then hijacked it, killing the passenger on the spot.

They abandoned the vehicle near an Indian army artillery unit a few miles away.

Security forces intercepted the gunmen, triggering a three-hour firefight that ended with the deaths of the suspected rebels and one of the soldiers.

"All three militants were killed. Their bodies were recovered as well as that of the driver," inspector general of police, Rajesh Kumar, told AFP.