The police, armed with stun grenades and water cannons, attacked the camp after at least 18 people died and hundreds were injured in street clashes.
The violence was the deadliest in nearly three months of anti-government protests that have paralysed Ukraine's capital in a struggle over the nation's identity.
Opposition leader Vitali Klitschko urged the 20,000 protesters to defend the camp on Independence Square.
Government agencies said seven police officers and 11 protesters have died in the violence.
"We will not go anywhere from here," Mr Klitschko told the crowd, speaking from a stage in the square as fires burned around him, releasing huge plumes of smoke into the night sky.
"This is an island of freedom and we will defend it," he said.
Earlier in the day, protesters attacked police lines and set fires outside parliament, accused President Viktor Yanukovych's government of ignoring their demands once again.
The clashes dimmed hopes for an imminent solution to the political crisis and fuelled tensions that began soaring following new steps by Russia and the EU to gain influence over this former Soviet republic.
In addition to the deaths, the interior ministry and medics for the protesters said 40 police and about 150 protesters were injured.
US Ambassador Geoffrey Payatt called for dialogue, but also threatened both sides with sanctions.
"We believe Ukraine's crisis can still be solved via dialogue, but those on both sides who fuel violence will open themselves to sanctions," he said on Twitter.
The protests began in late November after Mr Yanukovych froze ties with the EU in exchange for a 15 billion US dollars bailout from Russia, although Moscow later suspended its payments.
Yesterday, however, while opposition leaders were meeting German Chancellor Angela Merkel, Russia offered a fresh infusion of the billions of dollars that Ukraine needs to keep its ailing economy afloat.
Today's confrontations came two days after the government and the opposition reached a shaky compromise, with protesters vacating a government building in Kiev they had been occupying since December 1 after the government released of scores of jailed activists.
But tensions rose after Russia's finance minister offered to resume financial aid to Ukraine, just as Mr Yanukovych was expected to nominate a new prime minister, prompting fears among the opposition that he would choose a Russian-leaning loyalist.
Mr Klitschko said that Mr Yanukovych agreed to meet opposition leaders early tomorrow, but admitted that there was little trust in the government left.
He called on Mr Yanukovych to agree to the reforms and to call an early election or face a serious escalation of the crisis.
Mr Yanukovych still remains popular in the Russian-speaking eastern and southern regions of Ukraine, where economic and cultural ties with Russia are strong.
But western Ukraine is keen to pursue closer ties to the 28-nation EU and move away from Russia's orbit.