Troops from the Para-Commando Battalion began the assault, christened 'Operation Twilight,' to round off a 30-hour siege against a complex housing two buildings -- a five-storey and a four-storey -- at Shibbarhi on the outskirts of Sylhet city.
Security forces have sealed off the whole area.
Thirty minutes before the assault at 9am, mediapersons and others in the area have been asked to move at least a kilometre away from the complex, when power and gas connections to buildings were cut off.
Until 2pm, gunfire was heard twice from the spot, but after 2pm, the exchange of fire intensified and the explosions rocked the area.
At least eight explosions were heard between 2pm and 3pm. Police officers outside the complex said the loud explosions could be grenades that the militants might have lobbed.
Around 2:30pm, three injured soldiers were seen being carried away for medical treatment.
As many 76 residents of the buildings were evacuated until 2pm, who appeared to be stranded in their homes during the stand-off, which began early on Friday.
They have been kept in a nearby building.
Police said they suspect at least two militants -- a male and a female -- are in the flat now.
Before the intense firing and blasts, an ambulance was seen entering the cordon.
SWAT and RAB personnel were manning the outer ring of the security cordon around the complex.
Other details are not yet available as no one from the army or the law enforcing agencies are speaking to the media after the assault began.
The Inter Services Public Relations Directorate (ISPR) has requested the media not to telecast the assault live.
The army has codenamed it 'Operation Twilight' -- a change of name from 'Operation Spring Rain' christened by the SWAT.
Thirty minutes after the assault began, an army officer told mediapersons that the soldiers were leading the assault and "the SWAT was only helping them."
ISPR Director Lt Col Rashedul Hasan told bdnews24.com: "The army's Para Commando Battalion is conducting the assault on the militant hideout in Sylhet."
SWAT personnel from Dhaka joined them Friday afternoon. A team of army commandos reached the scene later in the night.
Counterterrorism and Transnational Crime (CTTC) unit chief Monirul Islam reached the spot after Friday midnight.
A second team of commandos arrived Saturday morning, when the army took in charge of the operation.
It appears that the commandos and other security personnel first tried to evacuate the residents in the building which takes time under such risky circumstances.
It is only after the evacuation is complete and the commandos are sure of minimum collateral damage that a full-fledged assault can be launched.
Since this is an operation on a built-up area, the commandos would take a while to neutralise the militants, especially if they are using suicide vests.
How the raid began
CTTC Additional Deputy Commissioner Abdul Mannan said the members of the unit were carrying out a search operation in Sylhet with local police after getting information that militants have taken shelter in the district.
Police came under an attack later in the morning. The suspects shouted 'Allahu Akbar' while hurling grenades at the law enforcers.
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Police retaliated by opening fire, and the cordon was extended to the entire area, Sylhet Metropolitan Police Additional Commissioner Rokan Uddin said.
Stranded for a day
The residents of the vicinity found themselves apparently confined in the siege by the law enforcers when they woke up early in the morning on Friday, hearing sounds of blasts and shooting.
The streets to the complex were sealed off in the morning. The residents of some nearby buildings were evacuated, and police personnel took positions on the rooftops.
Police, using loudhailers, advised the other families stranded in the flats of the five-storey building to keep their doors and windows shut.