Pakistan 'crackdown on militants'
Pakistan is under intense pressure to act against militants
Pakistan's armed forces have moved against a camp used by banned militant group Lashkar-e-Taiba in Pakistani-administered Kashmir.
Witnesses heard several loud explosions and saw a helicopter and dozens of army personnel at the scene.
A BBC correspondent said the camp was sealed off, but Pakistani officials did not confirm its capture. India says the group is linked to the Mumbai attacks.
Pakistan is under pressure from India and the US to act against the group.
Reports said a number of people were arrested.
One of those held was a Lashkar-e-Taiba operational chief wanted in India, an official from the militant-linked charity that runs the camp told Reuters news agency, but this has not been confirmed by Pakistani officials.
The camp, at Shawai on the outskirts of Muzaffarabad, is run by the Islamic charity Jamaat-ud-Dawa, widely seen as a front for Lashkar-e-Taiba, which was itself banned in 2002.
Witnesses say the raid began on Sunday afternoon.
"I don't know details as the entire area was sealed off but I heard two loud blasts in the evening after a military helicopter landed there," local resident Nisar Ali told Reuters news agency.
Local residents said the army blew up buildings at the camp, which has an office, religious school and a residential area housing about 150 people.
The BBC's Zulfikar Ali, in Muzaffarabad, said he was unable to reach the camp because of the cordon, but did see about 14 army vehicles leaving the area.
The Associated Press news agency quoted militants as saying the camp had been seized by the military.
Islamabad denies any involvement in the Mumbai attacks which left at least 170 people dead, but some of the gunmen are said to have had links to Pakistani militants.
Indian investigators have said that the only gunman captured in Mumbai, Azam Amir Qasab, had been indoctrinated by Lashkar-e-Taiba, and trained at a camp run by the group.
Lashkar-e-Taiba (Soldiers of the Pure) is one of the most feared groups fighting against Indian control in Kashmir.
Although the authorities in Pakistan formally banned it six years ago and curbed its activities, analysts say its camps were never closed.
The New York Times, in a report on Monday quoting unidentified US intelligence officials, said that Pakistan's main spy service had allowed the group to train and raise funds in recent years.
The Directorate for Inter-Services Intelligence, or ISI, had shared intelligence with the group and protected it, the report said, but there was no evidence linking the ISI to the Mumbai attacks.
The raid on the camp followed growing pressure from both India and the US on the Pakistani government to act.
Last week, US Secretary of State Condoleezza Rice urged Islamabad to mount a "robust" and "effective" response to the attacks in Mumbai.
The assault will defuse tensions in the short-term, reports the BBC's Barbara Plett from Islamabad, but both Washington and Delhi will be looking to see how far the Pakistani action goes.