Belgian authorities identified the gunman killed in a raid targeting suspects in the Paris attacks as a 35-year-old Algerian and said police had detained two others while finding an Islamic State flag at the scene.
Investigators believe much of the planning and preparation for the Nov. 13 shooting and bombing rampage in Paris that killed 130 people was conducted in Brussels by young French and Belgian nationals, some of whom fought as militants in Syria.
On Tuesday, six Belgian and French police officers arrived to search a flat in a Brussels suburb and came under a barrage of automatic weapons fire through a door from at least two people barricaded inside, injuring four officers.
A special forces sniper shot dead gunman Mohamed Belkaid when he tried to fire at police from a window, prosecutors said.
They said a Kalashnikov assault rifle and a book on Salafism, a radical branch of Islam, were lying next to Belkaid's body, and that he had been living illegally in Belgium though was known to police only for a case of theft in 2014.
The apartment in southern Brussels also contained a large cache of ammunition and an Islamic State flag, investigating prosecutor Eric Van der Sypt said.
Investigators were holding a man admitted to hospital near Brussels with a broken leg that required surgery. The person who brought him to hospital fled as local police arrived.
Another suspect was detained for questioning after a further house search near the scene of the shooting.
Prime Minister Charles Michel summoned security and intelligence chiefs for an emergency sitting of Belgium's national security council on Wednesday to review the country's level of alertness and possible extra measures.
"The threat remains," Michel told RTL radio, adding that for now Belgium would be on the second highest alert level of three.
Brussels, headquarters of the European Union as well as Western military alliance NATO, was entirely locked down for days shortly after the Paris attacks because of fears of a major incident there. Several of those involved in the Islamic State shootings and suicide bombings were based in Belgium's capital.
Brussels has maintained a high state of security alert since then, with military patrols a regular occurrence.
People living in the Forest suburb of Brussels suffered hours of lockdown after the initial search turned into a firefight, and voiced shock at the turn of events in their quiet neighborhood.
Schoolboy Maxime, 11, was at home sick when he heard gunfire and helicopters and saw masked commandoes on a rooftop. "They had a huge weapon," he said, and "(I was) "very, very scared".
Belgian security forces have been actively hunting suspects and associates of the militants involved in the Paris attacks.
One of the prime suspects, 26-year-old Brussels-based Frenchman Salah Abdeslam, is still on the run. He left Paris hours after his brother blew himself up outside a Paris cafe. Belgian authorities are holding 10 people who have been arrested in the months since the attacks, mostly for helping Abdeslam.
Belgium, with a Muslim population of about 5 percent among its 11 million people, has the highest rate in Europe of citizens joining Islamist militants in Syria.