YEREVAN - One of the gunmen locked in a protracted siege with police in Armenia shot an officer dead Saturday, hours after authorities issued an ultimatum to resolve the hostage drama.

"A sniper opened fire from inside the police station and killed a police officer ... who was sitting in a car parked 350-400 metres (yards) away," police spokesman Ashot Aharonyan wrote on Facebook.

Earlier Saturday, Armenia's security services gave the gunmen a deadline to surrender after dozens were hurt and arrested in overnight clashes.

"We are giving members of the armed group until 5:00 pm (1300 GMT) to lay down their arms and surrender," the Armenian national security services said in a statement. "Otherwise special forces law enforcement have the right to open fire," it said.

"After the events of July 29, any opportunities to resolve the situation with the terrorists peacefully have been exhausted."

Dozens were injured and 26 arrested in the early hours of Saturday after authorities broke up a rally near the police station, where the armed pro-opposition group has been holed up for almost two weeks with several hostages.

More than 70 people were taken to various hospitals around the capital to be treated for injuries including burns and broken limbs.

"Out of 73 injured people, 26 are still in hospital, including six policemen," health ministry spokeswoman Anahit Haytayan wrote on Facebook.

Police used truncheons, stun grenades and smoke bombs to break up the demo in support of the gunmen, who are still holding two medics.

Journalists were among those hurt and a house caught on fire in the neighbourhood, a residential area.

Earlier Friday, police had exchanged fire with the gunmen, wounding two, who were taken to hospital under armed guard.

Armenian police told AFP that 165 people were detained in total during the overnight unrest, of whom 26 were later arrested.

The rest were released.

Authorities said they had launched a criminal probe into 23 of the protesters, including a member of the pro-Western Heritage party Armen Martirosyan.

However, the Armenian ombudsman accused police of heavy-handed tactics against journalists during the protest, and said plain-clothes officers prevented media from covering the event.

On Saturday the area was generally calm, with several police officers manning the cordon thrown up since the hostage situation erupted and only letting through local residents after an ID check.

The gunmen -- supporters of fringe jailed opposition leader Zhirair Sefilyan -- stormed the police building on July 17, killing one officer, taking several more hostage and seizing a store of weapons.

They have since freed all the police but on Wednesday seized four medical staff who had entered the compound to treat some of their wounds, two of whom were later released.

The group has demanded the resignation of President Serzh Sarkisian and Sefilyan's release and protesters have regularly gathered in the neighbourhood, voicing similar calls.

Sefilyan and six of his supporters were arrested in June, accused of preparing to seize government buildings and telecoms facilities.

The hostage crisis and violence has shaken the small landlocked ex-Soviet nation, just months after a surge in conflict with Azerbaijan over separatist ethnic-Armenian region of Nagorny-Karabakh left 110 people dead in April.

The US embassy in Yerevan said in a statement it was "deeply concerned by the shocking images and credible reports of violence and excessive use of force by the police to disperse protestors."

"We urge the Armenian government to take immediate steps to prevent a repeat of last night's actions," the embassy added.

The European Union also called for an end to the stand-off.

"Use of force and violence to achieve political change are not acceptable," an EU spokesman said in a statement.

"Conflicts need to be resolved through political dialogue with a respect for democracy, rule of law and fundamental freedoms."