The British officials were trekking in the area, recruiting young Nepalese men to work as Gurkha soldiers in the British army, said Prem Narayan Sharma, chief of Baglung district.
They had camped at Lekhali village, about 190 miles northwest of the capital, Katmandu, when they were kidnapped Sunday night by a group of armed rebels who surrounded their camp, he said. Three Nepalese helpers were also kidnapped, Sharma said.
The British Embassy in Katmandu confirmed that a team of five British Gurkhas had been out of contact since Sunday, but declined to give any more details.
"We do not have very much information at this stage," a British Ministry of Defense spokeswoman said in London.
"A small team were out recruiting and have been out of contact since last night," the spokeswoman, who spoke on condition of anonymity, said Monday. "We are trying to re-establish contact with them."
It was the first time that foreign nationals have been reported kidnapped by the rebels since they began their violent campaign in 1996.
One of the British officials was identified only as John Paul, while the second has not been identified, Sharma said.
Sharma said district officials only learned of the incident on Monday because the village is about four hours' trek from the district headquarters.
"A team of soldiers and policemen have been sent to the area and they will begin searching for the Britons at day break on Tuesday,'' police official Biswo Niranjan Pradhan told The Associated Press by telephone.
Pradhan said it was not possible to begin the search on Monday night because of the remoteness of the area.
The rebels are opposed to Nepalese men working for foreign armies and call them mercenaries.
Gurkhas began serving Britain in 1815 in India, and with Indian independence in 1947 became part of the British army. Nearly 3,600 serve now, and in recent years have taken part in British operations in Bosnia, Kosovo, Afghanistan and Sierra Leone.
The rebels, who say they are inspired by Chinese revolutionary leader Mao Zedong, have been fighting since 1996 to abolish Nepal's constitutional monarchy and set up a communist state. The government has labeled them terrorists.
More than 7,500 people have been killed since the insurgency began.
At least 25 rebels were killed in at least a half-dozen clashes with government troops over the past two days, the defense ministry said Monday.
It is virtually impossible to confirm police and military claims because the fighting typically takes place in remote locations and the rebels do not comment.
Meanwhile, a soldier was killed and eight others injured when their truck drove over a land mine on Monday.
The truck was part of a military convoy that struck the land mine near Kabilas, a village about 150 miles southeast of Katmandu.
The injured soldiers were flown to an army hospital in Katmandu.
Fighting between the rebels and government troops has escalated since the insurgents pulled out of peace talks and a seven-month cease-fire in August.
By Binaj Gurubacharya