The military opened fire after demonstrators burnt cars and barricaded themselves with barbed wires inside the iconic square, demanding that the ousted President Hosni Mubarak be put on trial and also called for resignation of the military strongman and head of the Supreme Defence Council Field Marshall Mohammad Hussein Tantawi.
The protesters chanted slogans like "Tantawi and Mubarak are one", and "We want resignation of Tantawi," apparently blaming the Defence Minister for stonewalling the trial of the deposed President.
Though eye witnesses said two people were killed in the firing, the military said it had only used blanks to disperse the protesters.
The protesters and military had enjoyed a powerful bonding in months of agitation against the then President Mubarak who was ousted on Feb 11.
Clashes erupted between the protesters and the military last night itself. But the army withdrew late in the night leaving the protesters in control of the Square from where they successfully led the uprising against Mubarak.
But pre-dawn, Al-Jazeera reported columns of military reappeared and stormed the Square from all sides.
Medics told the pan-Arab channel that at least two people had been killed in the clashes and the number could rise.
Military, in a statement released through the official news agency MENA, denied that they opened fire and blamed Mubarak's National Democratic Party for the clashes.
The protesters had been joined by perhaps as many as 20 military officers who had been under orders not to take part in public rallies.
The Arab channel said another reason for the military storming the Square could be to arrest its runaway officers, but most of them escaped.