Witnesses said that forces have cordoned off the whole area to nab the escaped prisoner who according to sources is a Pakistani national.
Two policemen were injured in the firing and one of them is reported to be critical. Out of them, one snatched weapons from the police and fired at the protection party.
Pakistan prisoner Abu Hanzulla alias Naveed Jutt fled with the assailants was arrested a few months ago in Shopian.
"Two J&K policemen killed by terrorists inside Srinagar's premier hospital".
SSP Srinagar, Imtiyaz Ismail Parray said that Naveed was brought from central jail for a medical checkup.
Two policemen suffered injuries in the attack and in the melee the suspected militants escaped along with Naveed and fled from the spot.
The policeman who succumbed to bullet wounds has been identified as Mushtaq Ahmed. Authorities have sounded a high alert in the city.
The militant had undergone intensive training and was good in handling equipment like compasses, GPS, wireless sets and mobile phones installed with Skype software, an official said.
A senior police officer said the militants were waiting outside the hospital to carry out the attack.
A Pakistani terrorist in police custody has escaped from a Srinagar Hospital on Tuesday (February 6) after he was brought their for a routine medical check-up.
The officials said that Naveed belonged to LeT's Wasim group and was involved in a number of terror acts including the killing of a police official and a schoolteacher before his arrest.