Rights groups denounced police violence, with Amnesty International saying that there had been two deaths, while Turkey's Western allies Britain and the United States called on the government to show restraint.
Taksim Square has become the epicentre of demonstrations that have left dozens injured -- hundreds according to Amnesty, which also said some protesters had been left blinded by the tear gas used by police.
Late yesterday however, the protesters danced and sang in the square after the police pull-back, some even launching fireworks in celebration.
"We are here Tayyip, where are you?" they chanted, taunting Prime Minister Recep Tayyip Erdogan.
What began as an outcry against a local development project has snowballed into a broader protest against what critics say is the government's increasingly conservative and authoritarian agenda.
Since the first clashes on Friday, the unrest has spread to other cities across the country.
Yesterday, police in Ankara blocked a group of demonstrators from marching on parliament and the prime minister's office.
Erdogan conceded in a speech that there may have been some cases of "extreme" police action.
The interior ministry said legal action would be taken against police officers who had acted "disproportionately."
Erdogan was speaking as clashes raged for a second day at Taksim Square, a popular tourist destination and traditional rallying site in Istanbul.
"It is true that there have been some mistakes, extremism in police response," Erdogan added.
The Turkish premier nevertheless vowed to push forward with controversial plans to redevelop the square -- the issue that sparked the protests.
Down in the square the mood was equally defiant.
"We are still ruled by a prime minister who thinks people are lambs and declares himself the sultan," said 19-year-old law student Batuhan Kantas, sitting exhausted on the ground.
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