Protests have been banned in Bahrain and the military has been ordered to tighten its grip after the violent removal of anti-government demonstrators, state TV reports.
The army would take every measure necessary to preserve security, the interior ministry said.
Three people died and 231 were injured when police broke up the main protest camp, said Bahrain's health minister.
The unrest comes amid a wave of protest in the Middle East and North Africa.
Bahrain's demonstrators want wide-ranging political reforms and had been camped out in the capital, Manama, since Tuesday.
US Secretary of State Hillary Clinton expressed Washington's "deep concern" in a call to the Bahraini foreign minister on Thursday.
Mrs Clinton "urged restraint moving forward. They discussed political and economic reform efforts to respond to the citizens of Bahrain," a state department official told the BBC.
MPs resign
The announcement on state television said the army had taken control of "key parts" of the city.
The capital has been effectively shut down, with tanks, army patrols and military checkpoints on key streets and helicopters deployed overhead.
Barbed wire has been erected on roads leading to the main protest area, Pearl Square, and the interior ministry has warned people to stay off the streets.
A ministry spokesman said: "The security forces have stressed that they will take every strict measure and deterrent necessary to preserve security and general order."
Protesters and opposition politicians expressed outrage at the violence of the crackdown.
A leader of the leading minority Shia opposition, Abdul Jalil Khalil, said 18 MPs were resigning in protest.
Ibrahim Sharif, of Bahrain's secular Waad party, told the BBC the protests would continue.
"We are going to do what's necessary to change this into a democratic country, even if some of us lose our lives," he said.
"We want a proper, functioning, constitutional democracy."
The demonstrators say they also want political prisoners to be released, more jobs and housing and the removal of Prime Minister Sheikh Khalifa Bin Salman Al Khalifa, who has been in office for 40 years.
Mr Sharif said the riot police had moved into Pearl Square at about 0300 (2400 GMT) as people were sleeping.
He said he had seen at least 100 riot police on one side of the square and hundreds of people running away down side roads.
One protester, Mohamed, told the BBC the attack had been "horrifying".
"They should have used water hoses at first instead of using rubber bullets and other prohibited weapons. There were women and children who were terrified by the attack."
Bahrain's authorities defended their actions.
Interior ministry spokesman Brig Tariq Hassan al-Hassan said some protesters had left quietly but others "refused to obey the law and that led to interference to make them leave".
He said the security forces had "been keen to communicate with the protesters through public figures to end the sit-in peacefully" but that some had "exploited this tolerant atmosphere".
But many protesters said there had been no warning about the raid.
On Thursday morning there were angry scenes outside Manama's main hospital, Salmaniya, as hundreds of people gathered, some answering calls to donate blood and others defacing images of the Bahraini royal family.
'Exercise restraint'
The crackdown has caused unease in the West. Bahrain is a key UK and US ally and hosts the US Navy's Fifth Fleet.
UK Foreign Secretary William Hague condemned the violent clashes, calling on Bahrain's government to "exercise restraint".
Foreign ministers of the Gulf Cooperation Council, which groups Bahrain, Oman, Qatar, Saudi Arabia and the United Arab Emirates, are to hold an extraordinary meeting in Bahrain on Thursday.
Bahrain's foreign ministry said the council was "expected to announce their support for the [Bahraini] government in security, defence and politically".
Since independence from the UK in 1971, tensions between the Sunni elite and the less affluent Shia have frequently caused civil unrest. Shia groups say they are marginalised, subject to unfair laws, and repressed.
The conflict lessened in 1999 when Sheikh Hamad bin Isa Al Khalifa became emir. He began a cautious process of democratic reform. In 2002, he proclaimed himself king and landmark elections were held.
But the opposition boycotted the polls because the appointed upper chamber of parliament was given equal powers to the elected lower chamber.
In a rare TV appearance on Tuesday, Sheikh Hamad expressed regret about the deaths of protesters and said he would continue with reform.
source : bbc.co.uk
