The incident has raised memories of the 1999 incursions

Defence Minister Sergei Ivanov said the 36-strong group of fighters had been "discovered and destroyed". Three were taken into custody, he said.

The rebels - thought to have come from Chechnya - killed nine border guards on 15 December and took several hostages.

The hostages were soon released while the band of armed militants melted into the snow-covered mountains.

A massive manhunt was launched and the Russian military has issued contradictory reports of dozens of rebels being killed on an almost daily basis.

The rebels launched a night-time attack on the remote mountain villages of Shauri and Galatli.

Separatist war

Correspondents say events have revived memories of a series of raids staged by Chechen separatists into Dagestan in August 1999 that - along with a series of bombings in Russian cities - sparked the second Chechen war.

The rebels held two villages for several weeks, saying they were supporting a declaration of an independent Islamic state in parts of Dagestan and Chechnya.

It is still not clear whether the latest incident has been a planned incursion or whether the group of fighters were interrupted as they were towards Georgia for the winter, correspondents say.

However, the Georgian authorities have strongly denied the rebels were heading for their border.