Indonesian police Sunday shot dead two terror suspects and arrested two more, only days after foiling separate plans by an IS-linked group for a Christmas-time suicide bombing near the capital.

The pair were fatally shot at a house in Purwakarta 100 kilometres (62 miles) east of the capital Jakarta after allegedly resisting arrest.

"We ordered them to surrender and even fired warning shots, but they resisted and started to attack our officers with machetes, so we had to take them down," national police spokesman Awi Setiyono told AFP.

Police raided the house after arresting and interrogating two men on Sunday morning.

The suspects attacked officers with knives but gave up after being shot and wounded, police said.

After being interrogated, they led police to a house at a separate location where two more members of the group were hiding.

Several sharp weapons were seized from the house but no explosives were found.

Police said the suspects and the dead men were members of the Jamaah Ansharut Daulah group, a local militant outfit which supports the Islamic State group and was responsible for a November attack on a church which killed a toddler on Borneo island.

"Their target is to attack police officers, in police posts or even at home. They wanted to attack with sharp weapons such as knives and machetes," Setiyono said.

Less than a week before Christmas, Indonesian police thwarted a suicide-bomb plot planned for the holiday season and shot dead three militants in a raid at South Tangerang just outside Jakarta.

Indonesia suffered a string of deadly homegrown attacks during the 2000s, including the 2002 Bali bombings which killed over 200 people.

A sustained crackdown has weakened many of the most dangerous extremist networks but there have been fears of a resurgence in militancy.