Armed suspects opened fire on police as they carried out a anti-terror raid in the southern suburb of Brussels called Forest on Tuesday afternoon. Four officers were left injured.
The raid, carried out jointly by French and Belgian police, was linked to the ongoing probe by Belgian authorities into the Paris terror attacks.
Later on Tuesday it emerged that one gunmen had been killed in the initial shoot-out at the apartment, but prosecutors said the dead man was not Salah Abdeslam, the chief suspect in the Paris terror attacks who remains at large.
"A body was found during a search of a house... his identity has not been established yet but whatever the case, it is not Salah Abdeslam," the Belga news agency quoted Eric Van Der Sypt, the spokesman for the prosecutor's office, as saying.
Scores of armed police descended on the area that was quickly placed on lock-down, while a helicopter monitored the area from above.
Belgian police continue to hunt for Salah Abdeslam, one of the key suspects in the November terror attacks, who remains on the run, however the Le Parisian reported that the raid was not linked to Abdeslam.
"The operation was not targeting Salah Abdeslam. It was aimed at people connected to one or several of the 11 Belgians who have been charged," the source told AFP.
As police entered the building they were fired on by men reportedly armed with Kalashnikovs, according to reports. Another shooting erupted shortly after.
Witnesses said the heavy exchange of fire lasted several minutes. According to Belgian broadcaster RTBF a third round of shots were fired in the Forest suburb at 4.45pm.
There are reports that four police officers were left injured, one of them - a member of the Belgian special forces, was said to have been shot in the head and the ear.
"Police were fired at," said Eric Van Der Sypt, a spokesman for the federal prosecutor, adding that the search in the southern Forest district was "linked to the Paris attacks investigation".
Belgium media reports that two suspects fled from the scene via the roof of the building and are still on the run, however reports later in the afternoon said an unknown number of suspects were still holed up in the building.
Forest mayor, Marc-Jean Ghyssels, told Belgium's Le Soir newspaper that “the number of fleeing suspects has not been determined at this stage”.
Images from the scene that have been published on Twitter show policemen with their arms drawn in the streets.
One resident described the "constant gunfire" as the shooting broke out.
"There are bullets being fired constantly, even now. My husband is tuck in the kitchen. We are afraid of stray bullets. It's not stopping," the frightened resident told RTL radio.
People in two schools and two nurseries near the scene were asked to remain indoors and the security cordon around the area was extended, the local mayor's office said.
The incident took place across the street from an Audi auto factory and the train lines leading to the Gare du Midi railway station where Eurostar trains to London and Thalys trains to Paris run from.
The French interior minister, Bernard Cazeneuve, said French police were also involved in the operation. “It was in the context of a raid. A team made up of Belgian and French police officers intervened and came under fire – shots from heavy weapons,” Cazeneuve said at a news conference in Ivory Coast.
French President Francois Hollande has said that the Paris attacks, that left 130 dead and hundreds more injured, were planned in Syria but prepared and organised in Belgium.
Many of the jihadists who attacked Paris in November came from Brussels including the ringleader Abdelhamid Abaaoud and Europe's most wanted man Salah Abdeslam, who fled across the border to Belgium hours after the attacks.
Abdeslam was reportedly holed up in an apartment in the Schaerbeek district in north Brussels for three weeks after the Paris attacks.
In January, Belgian authorities said they had found two apartments and a house used by Abdeslam and other suspects in the run up to the attacks.
A fingerprint belonging to Abdeslam was found in the apartment along with traces of explosives, possible suicide belts and a drawing of a person wearing a large belt.
In January, Belgium charged an 11th person with terrorism-related offenses over the deadly Paris attacks.