Seventy-five persons were also arrested in connection with the incident.
The Police Public Relations Officer, Kamal Datti Abubakar, confirmed this to newsmen.
Abubakar said problem started after a misunderstanding, leading to the torching of two houses, including that of a retired Superintendent of Police.
Unconfirmed reports said that two men were fighting over a woman.
It was reported that one of those killed was a civil servant who worked at the Federal Secretariat, Bauchi.
Residents of Gwallameji, near the Federal Polytechnic, Yelwa Kagadama Lushi, Kusu and High Tension, said they heard gunshots from 11.00pm till early hours of Monday, but the Police spokesman said he could not confirm the allegation of gunshots.
Residents of the area however alleged that, following the public disturbance, policemen had been going from house, “making arbitrary arrests.”
But Abubakar, a Deputy Superintendent of Police, told our Correspondent that security agencies have been able to contain the situation.
“There was a birthday party in Lushi area and as a result, three people were killed and eight people injured,” Abubakar said.
On the alleged arbitrary arrest of residents by the Police, the Command’s Spokesman said, “We were able to arrest 75 people in connection with the crisis. We had to make such arrests in order to forestall further breakdown of law and order.
“It can be indiscriminate arrest, but anybody that has connection with that incident were the people we arrested. Two houses were also burnt in the incident.”
He said the situation had been brought under control and that investigation was ongoing to get to the root of the crisis.
The PPRO assured that those involved would be brought to book.