The Mongkok site has seen violent scuffles between demonstrators calling for full democracy in the southern Chinese city and pro-government groups.
The dawn raid was met with no resistance from demonstrators, and came as the city's Chief Executive Leung Chun-ying renewed his offer for talks with student protesters a week after abruptly pulling out.
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The Asian financial hub has been rocked by mass rallies for nearly three weeks calling both for full democracy and Leung's resignation.
Ongoing sit-ins at three major intersections have caused significant disruption to a city usually known for its stability.
China has insisted that Leung's successor must be vetted by a loyalist committee before standing for election in 2017, a proposal protesters have dismissed as a "fake democracy".
The occupation of Mongkok -- the second largest rally site and a densely packed working-class district known for its triad crime gangs -- was a regular source of tension between protesters and many residents.
Demonstrators were attacked earlier in the month by masked thugs with suspected triad links, sparking angry scenes and accusations police did little to halt the assaults.
City authorities pulled out of talks with student protesters last week, plunging the two sides deeper into an impasse with no obvious ways out.
Leung announced the reopening of talks with the Hong Kong Federation of Students (HKFS) yesterday while insisting police operations to clear protester barricades would continue.
HKFS official Ivan Law told AFP police action to clear Mongkok now threw doubt over those discussions, adding that the student union would meet to decide their response.
The raid began shortly before dawn as officers armed with boltcutters and saws descended on the camp, which straddled a major arterial road.
"It happened really fast," said 20-year-old protester Prince Yung Chung-To. "A lot of police came at 5 o'clock shouting they were going to clear the area."
Police were seen tearing down tents, barricades and umbrellas -- the defining symbol of the democracy movement -- and piling them into the back of a van.
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