Updates death toll (first version posted at 21:40)
Security forces opened fire on thousands of protesters marching to the government cabinet in the capital Sana'a on Wednesday, killing at least one and injuring dozens more, according to medical sources.
Another two protestors were killed in the souther city of Taiz, dpa reported.
Up to 20,000 protesters in Sana'a had been marching from the city's main protest hub of Taghyeer Square towards the cabinet meeting in an effort to expand their sit-in when security opened fire directly into the crowd.
"It was a completely peaceful march until the security opened fire on the youthful protesters," Ibrahim, a protester in Sana'a told the German Press Agency dpa.
Broadcaster Al Jazeera broadcast live images of doctors scrambling to save dozens of people who were rushed to a nearby hospital shortly after the incident.
The broadcaster also showed shaky images of soldiers firing tank missiles at crowds.
Sarah, another local activist, told dpa she was at the scene when she heard gunshots and left.
"There was the sound of heavy gunfire just outside Taghyeer Square," said Sarah. "People are being killed and the world is silent about what's happening."
Meanwhile, security forces shot and killed two protestors in the southern city of Taiz as residents stormed several government buildings, according to a resident there.
This raises the week's death toll in Taiz to five, including two teachers, according to medical sources and residents.
Four other people were in critical condition on Wednesday after security shot at protesters in the city, one of the country's most populated.
The protesters, who are agitating against President Ali Abdullah Saleh, had seized the local offices of the Oil Ministry, civil services and a police station, said the witness.
The resident, who requested anonymity and spoke to dpa by phone from Taiz, said at least one person was injured by gunfire near the local Education Ministry's office while filming protesters from his balcony.
It was not clear who fired the shot.
"Police used live ammunition and tear gas to break up the rallies," a witness in Taiz told German press agency dpa.
Thousands of people also blocked main roads in Taiz, demanding the ouster of Saleh who has been in office for 32 years.
Protests, which erupted in Yemen in January and grew more strident in February after the fall of Egypt's Hosny Mubarak, have left over 120 people killed, according to rights groups.
Teachers have been camped outside the Education Ministry's building for several days, demanding full pay after their salaries were slashed to reflect time they had taken from work to attend protests.
Saleh, a key US ally in efforts against the terrorist network al- Qaeda, remains defiant, despite growing pressure from neighbouring states to accept a Gulf proposal that would require him to transfer power to his deputy 30 days after inking the deal.
He would be allowed to remain head of the ruling party and would be guaranteed immunity from legal prosecution under the Gulf proposal.
While the opposition coalition Joint Meeting Parties (JMP) has accepted the proposal, protesters reject the deal, saying Saleh must stand trial for the deaths of activists shot by security forces.