A parliamentary session in the Maldives due to have begun on Monday has been postponed indefinitely.
The protesters are demanding political reform
It follows the imposition of a state of emergency on Friday.
Members of parliament were expected to discuss the controversial issue of democratic reforms in the Indian Ocean republic.
Last week a protest by about 5,000 people calling for more democracy triggered violence between the police and the demonstrators.
Security forces arrested 180 people, including a former attorney general, Mohammed Munavvar and a former minister, Ibrahim Hussain Zaki, following the demonstrations.
In an interview with the BBC, a spokesman for the opposition Maldivian Democratic Party, Ahmed Moosa, condemned the move as a barbaric attack on democratic rights and accused the government of denying Maldivians much of the revenues earned from the island's famous tourism industry.
But the government insisted that its action against the protesters did not mean the end of political reforms in the islands.
"These people didn't have a single demand to make. They were asking for the release of certain criminals. This kind of demand the government cannot accede to," government spokesman Ahmed Shaheed told the Reuters news agency.
"The government believes the weekend incident was an attempt to derail the process for real democracy... We remain fully committed and we want to fully resume the agenda," Mr Shaheed said.
He said about 160 people involved in the demonstration were in custody, but said they were only being questioned about their role and denied reports of police brutality.
Political parties are banned in the Maldives, where President Maumoon Abdul Gayoom has ruled for 25 years.
The emergency order gives President Gayoom the power to suspend the constitution and take any steps necessary to maintain peace.
An indefinite curfew was imposed in the capital, Male, after police used tear gas to disperse the protesters, witnesses
and officials said.
1,200 islands in archipelago
Population is over 300,000
One-party rule since 1978
Low-lying islands vulnerable to rise in sea-levels
The BBC's Sanjeev Srivastava says the protests began when a group gathered outside the national police headquarters in Male demanding the release of four reformists detained in the past week.
As more people joined the protesters after Friday prayers in this Islamic country, the authorities decided to release the reformists.
But the gesture failed to pacify the pro-democracy activists who started to demand the immediate resignation of hardline ministers in the Gayoom cabinet and the Male police commissioner.
Anti-government protests demanding democratic reforms broke out in the island nation for the first time last year.
Correspondents say that the recent incident appears to be another sign of increasing frustration with the slow pace of political reform in the Maldives.
President Gayoom has suggested changes to the constitution which would limit his powers and permit political parties in the country.
Opponents of the government say it is responsible for arbitrary arrests, detention without trial and torture in prison.
The government says there is no repression and that it has no political prisoners in its jails.