Protests have been banned in Bahrain and the military has been ordered to tighten its grip after the violent removal of anti-government demonstrators, state TV reports.
The army would take every measure necessary to preserve security, the interior ministry said.
Three people died and 231 were injured when police broke up the main protest camp, said Bahrain's health minister.
The unrest comes amid a wave of protest in the Middle East and North Africa.
Bahrain's demonstrators want wide-ranging political reforms and had been camped out in the capital, Manama, since Tuesday.
Tanks and checkpoints
US Secretary of State Hillary Clinton expressed Washington's "deep concern" in a call to the Bahraini foreign minister on Thursday.
Mrs Clinton "urged restraint moving forward. They discussed political and economic reform efforts to respond to the citizens of Bahrain," a state department official told the BBC.
Police action was necessary to pull Bahrain back from the "brink of a sectarian abyss", Bahraini Foreign Minister Khaled bin Ahmed al-Khalifa said on Thursday.
Bahrain's Shia Muslim majority has been ruled by a Sunni Muslim royal family since the 18th Century.
The announcement on state television said the army had taken control of "key parts" of the city.
Tanks, army patrols and military checkpoints are out on key streets, with helicopters deployed overhead.
Barbed wire has been erected on roads leading to the main protest area, Pearl Square, and the interior ministry has warned people to stay off the streets.
Protesters and opposition politicians expressed outrage at the violence of the crackdown.
A leader of the main majority Shia opposition, Abdul Jalil Khalil, said 18 MPs were resigning in protest.
Ibrahim Sharif, of Bahrain's secular Waad party, told the BBC the protests would continue.
"We are going to do what's necessary to change this into a democratic country, even if some of us lose our lives," he said.
"We want a proper, functioning, constitutional democracy."
Mr Sharif said the riot police had moved into Pearl Square at about 0300 (0000 GMT) as people were sleeping.
Bahrain's authorities defended their actions. Finance Minister Sheikh Ahmed Bin Mohammed Al Khalifa told the BBC up to 70 police officers had been hurt.
"When (the police) first went in, they went in without any intention to harm anybody, just to move the people who were occupying the roundabout and blocking traffic," Sheikh Al Khalifa said.
"Some of those people left but some of those people came back and fought."
He added: "I think restraint is being used."
But many protesters said there had been no warning about the raid.
On Thursday morning there were angry scenes outside Manama's main hospital, Salmaniya, as hundreds of people gathered, some answering calls to donate blood and others defacing images of the Bahraini royal family.
The crackdown has caused unease in the West. Bahrain is a key UK and US ally and hosts the US Navy's Fifth Fleet.
UK Foreign Secretary William Hague condemned the violent clashes, calling on Bahrain's government to "exercise restraint".
Britain has also said it will review its licences for arms exports to Bahrain. The UK has sold tear gas and riot control equipment to Bahrain, but the Foreign Offices says these licences will be revoked if it is found those arms were used to facilitate internal repression.
Foreign ministers of the Gulf Cooperation Council, which includes Bahrain, Oman, Qatar, Saudi Arabia, Kuwait and the United Arab Emirates, are to hold an extraordinary meeting in Bahrain on Thursday.
Bahrain's foreign ministry said council members were "expected to announce their support for the [Bahraini] government in security, defence and politically".
Since independence from the UK in 1971, tensions between the Sunni elite and the less affluent Shia have frequently caused civil unrest. Shia groups say they are marginalised, subject to unfair laws, and repressed.
The conflict lessened in 1999 when Sheikh Hamad bin Isa Al Khalifa became emir. He began a cautious process of democratic reform. In 2002, he proclaimed himself king and landmark elections were held.
But the opposition boycotted the polls because the appointed upper chamber of parliament was given equal powers to the elected lower chamber.