Twelve people were shot dead and dozens wounded on Saturday when security forces and plain-clothed government loyalists launched a coordinated attack opening fire on a mass rally in the Yemeni capital of Sana'a, calling for President Ali Abdullah Saleh's resignation.

The crackdown has dampened hopes for a negotiated political solution to the nine-month uprising and heightened fears that the impoverished country may be heading towards civil war.

In an effort to pile further pressure on their autocratic ruler, who recently returned from Saudi Arabia after receiving treatment for injuries sustained in an assassination attempt, protesters launched an escalation campaign, calling for a mass demonstration on Saturday.

At midday, a crowd of 100,000 men, women and children stormed out of the tented protest encampment, dubbed Change Square, and into the city. As they marched deeper into the dusty streets of Sana'a, a volley of bullets fired by snipers stationed in nearby buildings rained down on the crowd. As the shooting intensified, young men appeared on battered motorbikes and began ferrying the wounded away from the fighting.

A few blocks away, soldiers could be seen distributing steel batons to mobs of plain-clothed government loyalists who closed in and began hurling rocks at the demonstrators.

But the violence seemed only to embolden the protesters, who pressed on and marched into the heart of the city. Young men ripped open their shirts, bearing their chests at the security forces, as the crowd roared: "Oh Ali Saleh, the courts are waiting for you."

Blood trickled down the walls of a nearby mosque-turned-field-hospital in Change Square where a group of doctors and medical students struggled to find the floor-space, let alone the medical supplies, for the dozens of wounded being brought in. Mohammed Al-Qubati, a doctor working in a field hospital, told the Observer that people were dying because of a "shortage of medical supplies".

In the corner of the mosque, three brothers wept over the corpse of their father before kissing his forehead and closing his eyelids. "What did he do to deserve this brutality?" one of them shouted. "He was marching peacefully and they shot him in the chest."

As the afternoon wore on clashes erupted between the republican guard – an elite force head by Saleh's son and heir-apparent Ahmed – and a division of renegade soldiers who have sided with the protesters. Black smoke billowed from the office of Al-Saeeda, one of Yemen's few independent television stations, as the two sides hurled mortars at each others' bases in the north of the capital.

The Ministry of Defence issued a statement on its website on Saturday evening saying the Interior Ministry denied the allegation that 10 people were killed today.

Amongst those wounded on Saturday was an Al-Jazeera Arabic cameraman who was shot in the kneecap. Three cameramen have been shot dead in the past month, prompting fears that the regime may be deliberately targeting them.

Saturday's crackdown comes just days before an expected vote by the UN Security council on a new resolution calling for Saleh's immediate resignation in return for immunity from prosecution.

Saleh, who returned to Sana'a on Friday, was airlifted to Saudi Arabia in June for emergency treatment, after a booby-trap explosion ripped through the mosque in his presidential compound. His prolonged stay in Riyadh gave false hopes to some that he might step down and allow a peaceful transition of power.

Protesters are hoping to see decisive action from the security council. Many in the anti-Saleh camp accuse both Riyadh and Washington of supporting Saleh, who had once been their ally against al-Qaida's Yemen-based wing. They accuse the west of adopting double standards by supporting the pro-democracy uprising in Libya but not in Yemen.

"We ask the west and our neighbours in the Gulf to withdraw their support for Saleh and his sons in order to stop this blood from spilling," said Dr Tariq Noman, a surgeon who has given up his job in a private hospital to treat the wounded.

Meanwhile, the Yemeni government has urged the UN Security Council to avoid a resolution targeting the embattled president, calling on it instead to back a political solution to the country's crisis.

"The government of Yemen that follows closely the discussions over the situation in Yemen at the Security Council, stresses that the solution for the crisis does not come through issuing resolutions," said an unnamed government official, quoted overnight on Wednesday by Saba state news agency.