Anti-government gunmen shot dead a police officer by sniper fire on Saturday, as thousands of protestors called for an opposition figure to be released and for President Serzh Sargsyan to resign.

Armenia has been thrust into crisis since an unknown number of gunmen seized the Erebuni police station in Yerevan on July 17, killing one officer and taking hostages. The gunmen have since released some hostages and now hold two medics.

The gunmen are demanding the release of Jirair Sefilian, leader of the opposition group Founding Parliament. He and six others were arrested in June and accused of preparing to take over government buildings and a television tower.

Protestors have faced off with police in support of the gunmen. On Saturday, several thousand people were on the streets, a day after police and protestors clashed the previous night, leaving several dozen injured including journalists.

Earlier on Friday, three of the gunmen were shot and wounded, apparently by police sniper fire.

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

The European Union urged police to show restraint and asked protestors to avoid violence.

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

The standoff threatened to further escalate after security forces on Saturday issued a 5 p.m. (13:00 GMT) ultimatum for the hostage-takers to surrender.

"Otherwise, special units of the law enforcement agencies will be authorized to open fire without warning," the security service said in a statement.

The deadline has so far passed without security forces taking action.

cw/cmk (AFP, AP, Reuters)