The government's move has sparked protests in southern Andhra Pradesh
Large parts of the southern Indian state of Andhra Pradesh (AP) have shut down in a strike called by the supporters of a new state.
Strict security has been imposed in 10 districts of the state and more than 100,000 security personnel deployed.
Fearing violence, the authorities have cancelled 9,000 buses and 165 trains.
The strike, called for the creation of a separate Telangana state out of AP, is also supported by students groups and the outlawed ultra-Left Maoists.
Earlier this month the government announced that it would allow the creation of Telangana - irrespective of opposition.
But last week, the authorities said that decision would be considered after consultation with all parties.
An estimated 35 million people will live in the proposed new state.
K Chandrasekara Rao of the Telangana Rashtra Samiti (TRS), which is spearheading the protest for a Telangana state, has resigned from the lower house of parliament, along with two other MPs from the region.
Fifty lawmakers from the Telangana region and belonging to the Andhra Pradesh assembly have also handed in their resignations.
The BBC's Omer Farooq in the AP capital, Hyderabad, says that the latest protests have cast a long shadow over new year eve celebrations in and around the city.
Our correspondent says that the state remanins gripped by tension and political instability - made worse by the security threat posed by Maoist rebels who say they support Wednesday's strike.
Groups of protesters have closed down several important highways connecting the state capital, Hyderabad, with other cities.
Burning tyres are being used to block roads and in many places protesters are squatting on highways, leading to massive traffic snarls.
"Two hundred and ninety two people have already been taken into preventive custody as a precautionary measure," Andhra Pradesh police chief R Girish Kumar said.
Mr Rao has resigned from parliament
He warned the protesters against forcibly enforcing the strike and asked the police force to be on alert against violence, specially in major cities and towns.
Fearing violence, the Andhra Pradesh State Road Transport Corporation has cancelled its entire service of 9,000 buses in the region.
Railway authorities have cancelled as many as 165 trains criss-crossing Telangana region and linking it to other parts of the state and the rest of India.
Several long-distance trains have been delayed by several hours by the protesters.
Most schools and colleges in the region, including in the state capital Hyderabad, are closed.
Shops, markets and business centres are also shut.
PROPOSED TELANGANA STATE
Population of 35 million
Spread over 10 districts of Andhra Pradesh, including Hyderabad city
Landlocked, predominantly agricultural area
One of the most under-developed regions in India
Culmination of 50-year campaign
More than 400 people died in 1969 crackdown
The protests follow federal Home Minister P Chidambaram's statement last week that all political parties will be consulted before deciding on a new state.
Mr Chidambaram explained the government's change in stance by saying that the situation in Andhra Pradesh had "altered" since he had made an announcement on 9 December on the formation of a Telangana state.
Politicians from Telangana reacted sharply to Mr Chidambaram's statement, saying that the government had put the demand in "cold storage".
About 50 lawmakers from the region also handed in their resignations in protest.
Telangana region, which includes Hyderabad - an IT hub of southern India and home to firms like Microsoft, Google and Dell - is spread over 10 northern districts of Andhra Pradesh.
Campaigners say Telangana's economic development has been neglected in favour of the richer and more powerful Andhra region - and that a new state is the only solution.
India has 28 states - the last three new states were formed in 2000: Chhattisgarh was created out of eastern Madhya Pradesh; Uttarakhand was created out of the hilly areas of northern Uttar Pradesh, and Jharkhand was carved from Bihar's southern districts.