The man threw the pipe-bomb at a traffic police post in Tasikmalaya city, West Java province, late yesterday but it failed to explode, said national police spokesman Boy Rafli Amar.
Two traffic policemen chased the suspect but he resisted arrest by attacking one of the officers with a machete and attempting to fire a homemade gun at them which failed to go off, he said.
"Police then shot him dead," Amar added. One of the policemen was injured in the machete attack and was receiving treatment in hospital.
Seven suspected militants were killed in last week's raids, including several allegedly link to a plot to bomb the Myanmar embassy, and 17 were arrested.
Police also believe the suspects were carrying out robberies to fund a militant group hiding in the jungles around Poso, on Sulawesi island.
Two alleged bomb makers suspected of being part of the Poso group were also arrested early today in different locations in Central Java province, police said.
Indonesia has mounted a crackdown on terrorism in the past decade in the wake of several attacks on Western targets, which has weakened key militant groups. Most attacks nowadays are low-impact and target Indonesian security forces.
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