Armenian PM Serzh Sarkisian storms out of talks with opposition leader Nikol Pashinyan

"Despite repeated calls to stop illegal rallies, Pashinyan continued leading a demonstration" in the capital, police said in a statement, adding that he and two other opposition MPs "were forcibly taken from the site" as riot police dispersed the rally.

An opposition MP Sasun Mikaelyan earlier told journalists that Pashinyan was arrested.

"People must liberate Nikol," he said.

As an MP, Pashinyan is protected by parliamentary immunity and cannot be arrested without the approval of lawmakers, in accordance with the Armenian constitution. 

Riot police using stun grenades clashed with demonstrators at the march led by Pashinyan in Yerevan's Erebuni suburb.

It came shortly after Sarkisian walked out of talks with the protest leader, the figurehead of mass rallies over the past 10 days to denounce Sarkisian's shift to the post of prime minister after a decade serving as president.

Opposition supporters have criticised the 63-year-old leader over poverty, corruption and the influence of powerful oligarchs.

The televised meeting between the Sarkisian and Pashinyan lasted only a couple of minutes before the premier walked out, accusing the opposition of "blackmail".

"I came here to discuss your resignation," Pashinyan, the leader of the opposition Civil Contract party, had told the prime minister before the cameras.

"This is not a dialogue, this is blackmail, I only can advise you to return to a legal framework... otherwise you will bear the responsibility" for the consequences, replied Sarkisian, a former military officer. 

"You don't understand the situation in Armenia. The power is now in people's hands," said Pashinyan.

"A party that scored eight percent in (parliamentary) elections can't speak on behalf of the people," Sarkisian said before walking out of the meeting room in Yerevan's Marriott hotel.

Pashinyan then vowed to "step up pressure" on Sarkisian to force him to resign to lead the march of hundreds of protesters with riot police out in force.

He called on police officers to "lay down arms and join in the protests" but they intervened using stun grenades and began dispersing the crowd.

Later in the afternoon, thousands of protesters gathered in Yerevan’s Republic Square, outside the government's headquarters that were cordoned off by riot police.

Dozens of protesters were detained, an AFP journalist reported from the scene.

Pashinyan had earlier announced the "start of a peaceful velvet revolution" in the landlocked South Caucasus nation of 2.9 million people.

He called for a nationwide campaign of "civil disobedience," urging civil servants "to stop obeying Sarkisian".

Under a new parliamentary system of government, lawmakers elected Sarkisian as prime minister last week.

Constitutional amendments approved in 2015 have transferred power from the presidency to the premiership.

After Sarkisian was first elected in 2008, 10 people died and hundreds were injured in post-election clashes between police and supporters of the defeated opposition candidate.