At least 28 people have died in street battles between Bangladeshi police and tens of thousands of Islamists, deepening the divide between the secular government and religious hardliners, AFP reports citing officials.
In some of the fiercest violence to rock the capital since independence four decades ago, hundreds more people were reported to have been injured as riot police broke up a mass rally near a key commercial district.
Hundreds of bankers, insurance officials and stock traders had to sleep in their offices as the sound of gunfire echoed around the Motijheel Commercial Area through much of the night.
Witnesses said shops were torched while trees had been torn down and thousands of rocks littered the ground.
Police told AFP they now had the situation under control in the city centre but further violence had broken out in other parts of Dhaka. The main Islamist group behind the protests said the death toll was much higher.
Police said they used sound grenades, water cannon, tear gas and rubber bullets to disperse at least 70,000 Islamists who were camped at Motijheel as part of a push for a new blasphemy law.
"We were forced to act after they unlawfully continued their gathering at Motijheel. They attacked us with bricks, stones, rods and bamboo sticks," Dhaka police spokesman Masudur Rahman told AFP.
The protesters dispersed early Monday, he added.
Mozammel Haq, a police inspector at Dhaka Medical College Hospital, told AFP that 11 bodies were brought to the clinic. One victim was a policeman who had been hacked in the head by protesters with machetes, Haq said.
Eleven other bodies were taken to three other clinics. Hospital officials said hundreds of people were injured.
There was also deadly violence at Kanchpur on the southeastern outskirts of the capital. More than 5,000 Islamists clashed with police and border guards, prompting security forces to respond with live rounds, local police chief Abdul Matin told AFP.
At least six people were killed there including three policemen and a border guard, police official Rezaul Karim told AFP. "They were beaten to death," he said.
The violence erupted Sunday afternoon after tens of thousands of Islamists demanding a new blasphemy law blocked highways and fought running battles with police.
Prime Minister Sheikh Hasina has ruled out a new law, insisting she will not cave into the demands of hardliners who have been infuriated by bloggers whom they accuse of insulting the Prophet Mohammed.
Chanting "Allahu Akbar!" ("God is greatest!") and "One point, One demand: Atheists must be hanged", activists from the hardline Hefajat-e-Islam marched along at least six highways, blocking traffic between Dhaka and other cities.
Police said the number of protesters reached around 200,000 people at one point although the numbers had dwindled by the early hours.
Maolana Muin Uddin Ruhi, a spokesman for Hefajat-e-Islam, said the death toll from the violence across Dhaka was much higher than that given by police but gave no exact figure.
"Police shot live rounds indiscriminately at our unarmed protesters. Thousands of people were also injured," he told AFP.
Fearing further violence, Dhaka police Monday banned all protests, marches and mass gatherings as well as the carrying of firearms until midnight.
Bangladesh, an officially secular country with a 90 percent Muslim population, has seen a surge in violence between Islamists and government forces since the start of the year when a court began handing down war crimes verdicts related to the 1971 independence conflict.
Three leading Islamists have so far been convicted for their role in mass killings during the conflict, which saw what was then East Pakistan break from the regime in Islamabad.
The overall death toll in violence between religious hardliners and the police since January now stands at more than 140.