LAHORE, Pakistan (AFP) - Pakistani security forces laid siege on Thursday to a suspected militant hideout just a few kilometres from the family home of Prime Minister Nawaz Sharif in the eastern city of Lahore, officials said.

One policeman was killed and three others wounded in the assault in the Raiwind area of Lahore, which came as a military operation against Taleban militants in the country's restive northwest enters its second month amid rising fears of reprisal attacks.

"A police team raided a house... around 2am on a tip-off about presence of suspected militants, but they retaliated," senior police official Malik Owais told AFP. "One terrorist has been killed and another injured in this operation has been arrested. Police have now occupied the compound," he added.

Mr Waqas Nazir, another police official, confirmed the incident, adding that the raid took several hours because civilians had to be evacuated from the area first.

Television footage showed a bullet-ridden compound with a large hole blown into one its walls being swarmed by police.

The police could not immediately confirm the group to which they belonged.

The Raiwind area is home to the famous 'Raiwind Palace' - the residence of the powerful Sharif political family which also includes the chief minister of the Punjab province of which Lahore is the capital.

It is also the base of the Tablighi Jamaat, a Sunni Muslim evangelical movement known for its ultra-conservative views.

Pakistan launched a long-awaited operation in the North Waziristan tribal district last month aimed at eliminating Taleban and other militant bases after a dramatic attack on Karachi airport, which marked the end of a faltering peace process with the Pakistani Taleban.

More than 800,000 people have been forced to flee from North Waziristan by the offensive.

Analysts have warned that the operation would likely lead to reprisal attacks in Pakistan's major cities at the hands of sleeper cells of militant outfits linked to the Taleban.

Thousands of civilians have died since Islamist militants rose up against the Pakistani state more than a decade ago.