According to first reports emerging from Tanduo village, the three injured cops were being airlifted to Sandakan. (pic on left - Army in Lahad Datu Town)
As of 12.45pm, villagers say they were still hearing gunshots.
However, Malaysian security forces have yet to confirm the first reports emerging from gunfire heard at Tanduo village from about 11am Friday.
Police have also decline to comment if the gunfire was the start of a move against the gunmen led by Azzimudie Kiram, the younger brother of self proclaimed Sulu Sultan Jamalul Kiram III.
The Star's attempt to contact Azzimudie went into answering mode but he has reportedly told a Philippines radio around 10.20am that they were being shot at and they had to defend themselves.
He claimed there were casualties on his side.
Azzimudie, who claimed that he was also involved in the shooting, said that the Malaysian security forces suddenly came in and the fire fight started.
He said he did not know if any of the Malaysian policemen were injured but he vowed not to retreat or call for a ceasefire.
Azzimudie said that his group will not retreat or call for a ceasefire but continue to defend themselves at Tanduo village which they have been occupied by about 180 followers including 30 gunmen since Feb 9.
As word of the shooting filtered out, parents in Lahad Datu and surrounding Felda Sahabat oil palm plantations and nearby Tungku, rushed to pick up their children, forcing schools to close.
Many shops in Lahad Datu town about 165kms away from Felda Sahabat 17 had also closed.
At the entrance to Felda Sahabat 17 where the Sulu group is holed up there heavy security presence with at least two ambulances of standby with a medical team.