One policeman was killed Saturday by gunmen barricaded inside a police station in Armenia's capital, Yerevan, as the security service warned the group to lay down their arms and surrender or law enforcement would open fire.
Armenia's National Security Service said the option to resolve the conflict peacefully had been exhausted.
Nearly 30 gunmen seized the police station on July 17, killing a police officer, wounding two others and taking nine officers hostage.
Three gunmen inside the station were wounded Friday in an exchange of gunfire with police. Authorities said that the gunmen shot first and the wounded inside the station were being treated by three members of an ambulance crew who were being held hostage.
A tense standoff between riot police and armed supporters of an imprisoned politician continued Saturday next to the police station.
Police used truncheons, stun grenades and tear gas to stop a crowd that was approaching the police station. One-hundred-sixty-five people were detained during the unrest. More than 20 opposition supporters were later arrested. The rest were released.
The standoff has set off a series of anti-government demonstrations, held almost every evening.
The U.S. Embassy in Yerevan said in a statement that it was "deeply troubled by the ongoing hostage situation."
Council of Europe Secretary General Thorbjorn Jagland urged both sides to "put an end to this dangerous situation without delay."
The gunmen have demanded the release of jailed opposition politician Jirair Sefilian, accused of plotting civil unrest, and the resignation of President Serzh Sargsyan.
A former military commander, Sefilian has accused Sargsyan of mishandling the long-running conflict between Armenian-backed separatists in the Nagorno-Karabakh region of Azerbaijan and Azeri forces.
A Moscow-brokered cease-fire halted four days of violence in the region in April, the worst confrontation in years, but sporadic shooting has continued and some deaths have been reported.