Turkish riot police fired tear gas and water cannon at hundreds of protesters armed with rocks and fireworks on Tuesday as they tried to regain control of a central Istanbul square at the heart of anti-government demonstrations.

Prime Minister Tayyip Erdogan struck a defiant note, declaring he would not yield to the protesters, while in a further sign of the effects the 10-day-old crisis has had on markets, the central bank said it would intervene if needed to support the lira.

Riot police backed by armoured vehicles moved into Taksim Square, epicentre of more than ten days of protest, soon after dawn. Bulldozers began removing barricades made of paving stones and corrugated iron.

What began as a protest at redevelopment plans for Gezi Park, a leafy corner of the square, has grown into an unprecedented challenge to Erdogan, who has governed for over 10 years. Victor in three consecutive elections, he says the protests are engineered by vandals, terrorist elements and unnamed foreign forces.

Protesters accuse Erdogan of an authoritarian rule and some suspect him of ambitions to replace the secular republic with an Islamic order – something Erdogan denies.