The Hizbul Mujahideen received a severe blow when its deputy supreme commander Ghulam Rasool Dar alias Nasir-ud-Din and financial chief Fayaz Ahmad Dar were killed in an encounter at Omarbad on the outskirts of Srinagar.

Following a tip-off, army troops surrounded a house in Omarbad locality, where the two were hiding, a defence spokesperson told rediff.com

The militants opened fire, and were killed when the troops retaliated.

"It is a big success," a police officer said.

Nasir-ud-Din was one of the most wanted militants in Kashmir.

The Hizb announced in Muzaffarabad in Pakistan-occupied Kashmir that Mahmood Ghaznavi would replace Ghulam Rasool Dar.