The News Agency of Nigeria reports that the Nigerian Army had earlier announced the death of three soldiers during the shooting.
Briefing journalists in Daura, the state Commissioner of Police, Alhaji Abdullahi Magaji, said one of the suspects was killed on Thursday night while the other four were trailed and killed on Mani-Dutsi road around 9.30am on Friday.
Magaji refused to confirm the death of two policemen in the incident.
The police commissioner said 10 guns, ammunitions and improvised explosive devices as well as two vehicles belonging to the suspects were recovered.
He said a police special squad was combing the area to smoke out some of the gunmen who escaped and appealed to residents to cooperate with security agents by exposing the hideouts of such criminals and their activities.
Meanwhile, economic activities have been paralysed in Daura town as many shops, filling stations and other businesses remained closed.
NAN also reports that security personnel are patrolling the area to ensure the maintenance of law and order, while many residents remained indoors.