MAKHACHKALA, March 27 (RIA Novosti) - A group of militants has been surrounded in an apartment block in a small town in Russia's North Caucasus republic of Daghestan, local police reported on Thursday.

"Police and FSB units surrounded a group of at least three militants in an apartment building in the town of Daghestanskiye Ogni [70 miles from Makhachkala] at 23:00 Moscow time [20:00 GMT] on Wednesday," a police source said.

The gunmen have refused to surrender and continue to exchange gunfire with police and FSB officers.

The town was put on high anti-terrorism alert late on Wednesday, with reinforcements and combat vehicles arriving at the site, the source said.

Although the active phase of the antiterrorism campaign in the North Caucasus officially ended in 2001, periodic bombings and clashes between militants and federal troops still disrupt Chechnya and nearby regions, including Daghestan and Ingushetia.

According to Russia's Interior Ministry, between 400 and 500 militants are currently active in the North Caucasus.

Russia is deploying about 30,000 interior troops in the North Caucasus region, including 23,000 in Chechnya and 6,000-7,000 in other North Caucasus republics where a surge in militant activity was registered.