At least 18 people were killed and 865 wounded in the Iraqi city of Karbala over Monday night when protesters came under attack.
Demonstrations turned violent outside the governorate's council office about 10pm local time.
Riot police and paramilitary units arrived and opened fire, protester Samir told The National.
"They hit protesters with live bullets from inside their cars," Samir said. "How can they attack them like this?"
Ali, another protester, said the police and army were also attacked by people wearing black civilian clothes.
“Unknown forces aimed at protesters, police and army," Ali said. "The police were co-operating with the protesters.
"There was a high number of injuries and some died. They used live bullets."
It was not clear who was behind the attack, and protesters said they were not sure whether the men were police or militias because it was hard to see through the tear gas.
Iraqi soldiers had been stationed around the protest site but withdrew after the attackers began firing, sources told AP.
Protesters also claimed there was a wave of arrests overnight at the homes of civil activists.
One said some protesters were arrested while in hospital, which was common in the last round of protests.
A resident said gunfire could be heard until dawn but despite the night of violence, students gathered to demonstrate again in the morning.
"I was between the area of the governorate office and Tarbiya," said Al Kaby, a protester from Karbala.
"They were gathered in front of the door of the provincial office. Men in black Hummers attacked us with live bullets.
"They attacked peaceful protesters who were only carrying the Iraqi flag. I saw people die in front of me."
Al Kaby believed the black Humvee vehicles used by the armed forces belong to the riot police.
On Tuesday he was back for protests in Karbala, which he said were quiet to start with.
"We just want to claim our rights, we will stay here," he said. "There's no solution but the fall of the regime."
The provincial governor, Nassif Al Khutabi, denied that any protesters were killed but said there were some injuries among security forces.
Three protesters in the southern city of Nasiriyah died overnight from wounds sustained in earlier demonstrations.
Monday was the fourth day of a second wave of anti-government protests, in which 250 people have been killed this month.
The army said it would impose an overnight curfew in Baghdad after students and schoolchildren joined the spreading protests to demand an overthrow of the government.
Large parts of Iraq were engulfed by demonstrations about unemployment and corruption this month. Protests have since evolved into demands for regime change.
Soldiers were seen beating high school students with batons in two Baghdad districts.
The Defence Ministry condemned the incident and said the soldiers did not represent the Iraqi army as a whole. It did not say if they would be punished.
Populist Shiite cleric Moqtada Al Sadr, who backs Parliament's largest bloc and helped to bring Prime Minister Adel Abdul Mahdi's fragile coalition government to power, on Monday called for early elections.
The first wave of unrest, before a two-week break with protests resuming on October 25, was investigated by an Iraqi government committee.
It found that 149 civilians were killed because security forces used excessive force to quell protests, and that more than 70 per cent of the deaths were caused by shots to the head or chest.
The committee held senior commanders responsible but stopped short of blaming the prime minister and other top officials, saying there had been no order to shoot.
The UN mission in Iraq said the authorities had committed serious human rights abuses.
The protests across Iraq, which are leaderless and largely spontaneous, have been met with bullets and tear gas by security forces from the first day.