Indian police say they have shot dead two suspected Islamic militants in New Delhi. The shooting occurred a day after India observed the first anniversary of a bloody attack on its Parliament.

Police say the early morning shootout took place after three men travelling by car to the Indian capital from a neighboring district failed to stop at a police checkpoint. The car crashed into a fence when police vehicles chased it.

Officials say two men were killed in the gunfight that ensued - a third suspect is believed to have escaped. Police say they recovered grenades and two assault rifles from the car.

The shootout took place near an ancient fort, and close to an Indian air force base. Police officials say intelligence reports had warned of a possible attack in the city by the Pakistan-based militant group, the Lashkar-e-Taiba.

Neeraj Kumar, a senior police officer, investigating the incident, told a television network preliminary reports indicate the militants were Pakistanis. "According to the information they are believed to be Pakistanis, owing allegiance to the Laskhar-e-Taiba, but it is too premature to confirm that," he said.

New Delhi says Islamic guerrillas based in Pakistan are responsible for attacks on its territory. Pakistani authorities strongly deny accusations that Islamabad aids or sponsors Muslim militant groups.

The latest incident occurred amid extremely tight security for Friday's observances of last year's attack on the Indian parliament. Nine people were killed when five armed gunmen entered the grounds of Parliament. The attackers were shot dead before they could enter the building. India blamed Pakistan-based militant groups for that attack.

The attack brought the two countries close to war, which was averted by intense diplomatic pressure. But tensions between the two rivals over the issue continue to run high.