"It is a Neo-JMB den where two militants were killed in the encounter...It (operation) is still underway," a senior police officer told reporters.
One of the militants detonated his suicide vest when police entered the single-story building at Bazrapur around Jhinaidah district, officer-in-charge of Moheshpur Police Station Ahmed Kabir was quoted as saying by the Daly Star.
The second militant died in another suicide blast inside the building, he added.
The first militant was identified as Tuhun.
The security forces now await arrival of a special bomb disposal unit at the scene to launch the "final assault" to flush out the rest of the militants, the official said.
Bangladesh witnessed an intensified anti-militancy clampdown across the country as the police headquarters recently circulated a list of nearly 5,000 suspected militants to all district police chiefs.
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