At least three civilians have been killed during protests in India-administered Kashmir after police targeted a home where a suspected rebel was holed up.

About 28 people were also injured in Tuesday's demonstration that followed a gun battle at the home in the southern town of Chadoora, where the suspected fighter was killed, police and witnesses said.

The firefight began after police and soldiers cordoned off Chadoora after a tip-off that at least one gunman was hiding in the house, said police Inspector-General Syed Javaid Mujtaba Gillani.

Army spokesman Colonel Rajesh Kalia said one rebel was killed in the operation and a weapon was recovered from the site. Residents said Indian troops blasted the house with explosives.

As the fighting raged, hundreds of residents chanting anti-India slogans marched to the area.

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Witnesses said intense clashes between rock-throwing protesters and government forces erupted just a few hundred metres from the besieged house, with police and paramilitary soldiers firing shotgun pellets and tear gas to stop the demonstration. Violence quickly spread to multiple areas.

Later, government forces fired into the crowd, killing three civilians, including a teenager, and injuring at least 20 others, police said, adding that eight police and soldiers were also hurt in the clashes.

Arshad Hussain, a 22-year-old resident of Chadoora who witnessed the clashes, said that government forces "deliberately" fired at people.

"Today, I dodged bullets for the first time [in my life] and it was very scary. Blood and pieces of flesh were visible in the corridor of the house where the rebel had taken his position," he said.

Al Jazeera was unable to immediately reach the Jammu and Kashmir state government or the ruling People's Democratic Party for comment.

In Srinagar, the main city in India-administered Kashmir, police stopped an ambulance and took custody of the body of a 23-year-old student killed in the protests.

The man had been brought to a Srinagar hospital where doctors declared him dead.

Police fired tear gas and swung batons after the dead man's relatives pleaded to be allowed to take the body back to Chadoora.

A police officer, speaking on a customary condition of anonymity, said the body was taken to avoid more protests in Chadoora and it would be handed to relatives for burial later on Tuesday.

Disputed land

Nuclear-armed neighbours India and Pakistan each administer part of Kashmir, but both claim the Himalayan territory in its entirety. Most people in India's portion favour independence or a merger with Pakistan.

Separatist leaders who challenge India's sovereignty over Kashmir called for a shutdown and further protests on Wednesday against the killing of the three civilians.

Three key leaders - Syed Ali Geelani, Mirwaiz Umar Farooq, and Yasin Malik - said in a statement that the killings were "brazen state terrorism".

Last month, India's army chief warned "tough action" would be taken against stone-throwers during counter-insurgency operations. But the anti-India protests and clashes have continued.

Rebels have fought against Indian rule in Kashmir since 1989. More than 68,000 people have been killed in the armed uprising and ensuing Indian military crackdown.

Additional reporting by Fahad Shah