Around 200 police moved in on the demonstrators, many wearing bamboo hats and waving banners calling for worker rights, as they entered the outskirts of Naypyidaw -- where they hoped to speak to the government.
"We arrested about 60 protesters today. We tried to do it without hurting anyone," Naypyidaw region police chief Ko Ko Aung told AFP.
"We will not take further action against all of them, just those trying to cause violence," he said.
Since taking the helm following a landslide November election victory, the administration has freed scores of activists and political prisoners and signalled its determination to repeal oppressive laws.
But police have launched legal action against activists involved in several recent demonstrations, and rights groups have expressed concern over efforts to amend draconian protest laws.
The protesters in Naypyidaw have been marching for about three weeks from northern Sagaing Region, where around 100 workers have recently been fired from a timber factory.
The demonstrators were met by a wall of security forces as they tried to enter the capital and after a brief stand-off, officers began rounding up demonstrators, which led to scuffles.
"We didn't do anything wrong by protesting. Arresting us is unfair," one of the activists called out to reporters as she was arrested.
Earlier this week police announced plans to take action against five leaders of an interfaith rally in Yangon because the campaigners had deviated from the agreed protest route.
Rights groups have raised alarm bells over a number of provisions in a draft amendment to the Peaceful Assembly Act that is due to be debated in parliament in the coming days.
They fear these will continue to penalise non-violent demonstrations, albeit with shorter jail terms.
The proposed draft would mean protesters must still give local police 48 hours' notice of the place and time of any rally, as well as details of planned speeches and slogans.
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