* Fourth militant killed when grenade detonates - govt
* Militant Islam a growing threat in parts of C.Asia
(Adds govt quotes on police raid, background)
OSH, Kyrgyzstan, Nov 29 (Reuters) - Kyrgyz special forces killed four Islamist rebels during a raid on Monday, a security official said, as the Central Asian state grapples with the threat of militancy while trying to form a new government.
Marat Imankulov, head of Kyrgyzstan's Security Council, said special forces shot three members of a banned Islamist group and a fourth was killed after detonating a grenade in the city of Osh, where hundreds were killed during ethnic violence in June.
"The operation has been concluded and a sweep of the area is under way," Imankulov told reporters in the capital, Bishkek. He said two policemen were wounded in a gun battle during the raid. A Reuters witness in Osh, Kyrgyzstan's second city, had earlier heard three explosions.
Kyrgyzstan, an impoverished former Soviet republic hosting U.S. and Russian military air bases, suffered its worst violence in modern history in June when more than 400 people were killed in clashes between ethnic Kyrgyz and Uzbeks in and around Osh.
After elections last month, the country is attempting to form the first parliamentary democracy in Central Asia, a region otherwise governed by authoritarian presidents. Critics of the new government say it lacks authority in the volatile south.
Analysts say grinding poverty throughout many parts of Central Asia, which lies on a major drug trafficking route out of Afghanistan, and a Soviet-style clampdown on opposition groups are pushing many young people to embrace radical Islam. Imankulov said preliminary reports suggested the militants could have belonged to the Islamic Movement of Uzbekistan (IMU), an al Qaeda-linked group whose exiled members are fighting with the Taliban in Afghanistan.
The IMU announced a new leader, Usman Adil, in August to replace Tahir Yuldashev, who was killed a year previously by a U.S. drone missile near the Pakistan-Afghanistan border.
The IMU is not the only group suspected. A local police spokesman said the raid could have targeted members of another banned Islamist group, Hizb ut-Tahrir.
Hizb ut-Tahrir, or Party of Liberation, shares the IMU's ambition of creating a theocratic Muslim state across the region. But its members say it uses only peaceful means.
There are no accurate figures on membership of the group, although some estimates put it at 8,000 in Kyrgyzstan alone. (Additional reporting by Olga Dzyubenko in Bishkek; Writing by Robin Paxton in Almaty, Steve Gutterman and Conor Humphries in Moscow; Editing by Maria Golovnina)
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