Explosions are taking place, fireworks are being thrown and large fires have broken out in Independence Square, known locally as the Maidan.
Police have deployed water cannon.
During the day, at least nine people were killed, including two policemen, as protesters and security forces clashed in the worst violence in weeks.
Security forces had given protesters a deadline of 18:00 local time (16:00 GMT) to end the unrest and had surrounded Independence Square, which has been the scene of a mostly peaceful protest camp since November.
The city's metro service was suspended, and there were reports that cars were being prevented from coming in to the capital.
Protest leaders had insisted they would not retreat, though but warned that they could not "exclude the possibility" of the authorities using force.
Large fires are burning in the square, including around these statues of Kiev's founders
Protesters have remained in the square, some setting off fireworks
Protesters have started fires to hold back police lines
Shortly before 18:00 GMT, police announced over loudspeakers that they were about to begin "an anti-terror operation".
Then they began advancing with an armoured vehicle. Police dismantled barricades and fired stun grenades and water cannon.
Protesters lit fires and threw fireworks. Large fires are burning in the square and have destroyed many tents.
Despite the clashes, large numbers of people are still in the square. Protest leaders are on the main stage, encouraging people to stay.
"We will not go anywhere from here," said opposition leader Vitaly Klitschko.
"This is an island of freedom and we will defend it."
Mr Yatsenyuk, who leads the Fatherland party, appealed to President Viktor Yanukovych to "call off your chain dogs who are shooting at civilians".
"There are people here, children, youth and women. We did not start this confrontation. We are urging you to pull the law enforcement bodies back 200 metres. Stop the bloodshed and call a truce until morning," he said, in a speech from the stage which was broadcast on Ukraine's News 24 channel.
"We are talking about human lives and the future of the country which could be drowned in blood. Stop, Viktor Yanukovych, stop."
An aide to Mr Yanukovych was quoted by Ukrainian media earlier as saying the president was "against confrontation and conflict" and did not want to forcibly disperse the camp.
The BBC's David Stern in Kiev says this is a key moment for the country and that many people are scared of further escalation. Although this does not necessarily mean a civil war - as some have previously suggested - Ukraine remains dangerously divided, our correspondent says.
UN Secretary General Ban Ki-moon had earlier called for restraint and dialogue.
The White House said it was "appalled" by the violence, saying "force will not resolve the crisis".
"To restore peace and stability, we urge President Yanukovych to de-escalate immediately the situation and end the confrontation" with protesters, said spokesman Jay Carney. "We also urge him to restart a dialogue with opposition leaders today."
In other messages of concern:
German Foreign Minister Frank-Walter Steinmeier said Ukraine was "experiencing dramatic hours" and that was up to the security forces to "ensure that there is a de-escalation and that the use of violence does not escalate further". He said the EU could consider imposing sanctions on Ukrainian figures.
The UK's Minister for Europe, David Lidington, said such violence had "no place in a European democracy" and urged "all parties to return to the path of compromise and genuine negotiation".
Poland's foreign ministry said it had summoned Ukraine's deputy ambassador to express its concern, and called for "immediate dialogue".
EU foreign policy chief Catherine Ashton earlier said she was "deeply worried" about the unrest and urged politicians to "address the root causes".
Russia blamed the earlier violence on "connivance by Western politicians and European structures" and their refusal to consider the "aggressive actions" of radical factions within the protest movement.
March blocked
Ukraine's unrest began in November, when President Yanukovych rejected a deal with the EU in favour of closer ties with Russia.
Pro-EU protesters are demanding his resignation and snap elections.
After weeks of unrest, the mood had calmed in recent days, but the protest camps remained in place.
Then earlier on Tuesday, police blocked protesters from marching on parliament, where MPs had been due to debate proposed changes to the constitution which would have reduced the powers of the president.
The debate did not take place. Mr Yatsenyuk said President Yanukovych was blocking the reforms and that his allies "show no desire whatsoever to end the political crisis".
A number of ambulances were seen around the square - it was unclear how many people had been injured
Protesters were earlier blocked by police as they tried to march on parliament
But MPs who support the president said the proposals had not been thoroughly discussed, and that more time was needed.
Some protesters outside parliament ripped up cobblestones to throw at police. Others threw smoke bombs. Police fired stun and smoke grenades, and rubber bullets.
Protesters also attacked the headquarters of President Yanukovych's Party of the Regions, temporarily smashing their way in and setting it on fire before being forced out by police.
At least seven protesters were killed along with two policemen who officials said died of gunshot wounds.
The president is scheduled to meet protest leaders on Wednesday morning to discuss the constitutional proposals.
In a key development, one of Ukraine's richest men - and a powerful financial backer of Mr Yanukovych - said on Tuesday that he believed there were "no circumstances that would justify the use of force against peaceful citizens".
"Human losses and injuries suffered by protesters and law-enforcers during street clashes is an unacceptable price for political mistakes," he said in a statement, calling for a return to negotiations for a peaceful solution to the crisis.
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