The five were shot dead on Tuesday when police raided their hide-out in Urumqi, the capital of the Muslim-populated Xinjiang region in China's far northwest, the official Xinhua news agency reported, citing local authorities.

Fifteen people, all members of Xinjiang's Muslim Turkic-speaking Uighur majority population, were at the apartment and had been wielding knives when police conducted the raid, the report said.

"The suspected criminals that police killed and nabbed... were from a 'holy war' training group," Xinhua said, citing an unnamed Urumqi police spokesman.

"After police used tear gas on the premise, a roomful of people tried to break out, waving knives and injuring one policeman. The policemen were then forced to open fire, killing five on the spot and injuring two."

It said the others had been detained and confessed to planning terrorist attacks against China's majority Han population.

Police found more than 30 knives at the apartment in which they were hiding, the biggest of which was 50 centimetres (20 inches) long, according to Xinhua.

The report made no mention of any heavier weapons, such as guns or grenades.

China has repeatedly warned of a terrorist threat from Xinjiang, which borders Afghanistan and Central Asia, and announced at least five separate raids this year in the region that have foiled attacks.

China said in April it had crushed a group in Xinjiang that was plotting to kidnap foreign journalists, tourists and athletes during the Olympics.

In another case, police in Urumqi said they broke up a group in January whose leaders were planning to stage attacks in Beijing and Shanghai with toxic materials and explosives.

However human rights groups and exiled Uighurs allege the government has fabricated or exaggerated the terrorist threat as an excuse to crush all forms of dissent there.

Many Uighurs say they have been subjected to 60 years of repressive communist Chinese rule, and have complained of an increased security crackdown ahead of next month's Games.

The Xinhua report on Wednesday said the Uighurs, 10 men and five women, threatened to "perish together" when cornered by police and shouted "sacrifice for Allah".

"The suspects confessed they had all received training on the launching of a 'holy war.' Their aim was to kill Han people, the most populous ethnic group in China whom they took as heretics, and found their own state," Xinhua said.

When contacted by AFP, Urumqi police referred all media inquiries to the regional police headquarters. However the Xinjiang police refused to comment.

Xinjiang is a vast region of deserts and stunning mountain ranges that is home to more than eight million Uighurs who have long chafed under Chinese control.

While enjoying periods of Muslim autonomy in the past, Xinjiang was brought firmly under Beijing's wing with the 1949 founding of Communist China.

China says it has spurred economic development in a backward region, but many Uighurs still push for an independent "East Turkestan" -- the Uighur term for their homeland.

Many Uighurs allege Chinese political and religious oppression, and systematic discrimination against them in employment, education, and business.

Exile groups say thousands of Uighurs have been rounded up in the run-up to the Olympics to ensure their complaints are not heard.

"(The crackdown) is intended to prevent Uighurs from telling foreign reporters and visitors the truth of their suffering," Rebiya Kadeer, head of the Uighur American Association, told AFP recently.

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