A suspect shot dead in an anti-terror raid in Brussels was found with an Islamic State flag, an assault rifle and a book of Salafist literature beside his body, according to Belgian prosecutors.

Belkaid Mohamed, a 35-year-old Algerian national who was in Belgium illegally, was killed by police snipers during Tuesday's raid.

Four police officers were injured in the shoot-out, which began after Belgian and French authorities carried out a routine search linked to November's Paris attacks.

Police came under fire when the flat's door was opened and witnesses reported a heavy exchange of gunfire lasting several minutes.

Two people have since been detained, one of whom was admitted to hospital near Brussels with a broken leg.

Authorities are working to determine whether they were connected to the shooting, which took place in the southern suburb of Forest.

Federal prosecutor Thierry Werts said two other people who were likely inside the flat fled the scene and "are being tracked down".

Extensive searches throughout the southern district of Brussels have so far produced "no results", he added.

As the scene unfolded on Tuesday, children and teachers in two schools and two nurseries nearby were asked to remain indoors.

They were eventually let out one-by-one accompanied by armed police.

Police later began letting people back into their homes and 50 people who had been trapped in an Aldi supermarket were also allowed out.

Belgium's Prime Minister Charles Michel said a major police operation continues in the capital.

"The investigation continues and the danger remains," Mr Michel told the broadcaster RTL.

The mayor of Forest, Marc-Jean Ghyssels, told RTBF radio that all schools and nurseries in the area have reopened on Wednesday.

"There wasn't a direct threat to the public, it's a search that turned badly," he said.

 

Brussels was placed on high terror alert in the aftermath of the Paris attacks, leading to the cancellation of public events such as New Year's Eve festivities.