Seven people have been killed and 12 injured by Myanmar police when it opened fire on demonstrators with live bullets in Rakhine State.

The incident occurred when a local gathering celebrating an ancient Buddhist Arakan kingdom turned violent.

The demonstrators gathered late on Tuesday in Mrauk U township in the northern part of Rakhine to mark the end of the Arakan kingdom, the secretary of the Rakhine state government, Tin Maung Swe, told Reuters.

Some 4,000 people surrounded a government building after the annual ceremony marking the demise of the Arakan kingdom over 200 years ago, Tin Maung Swe said. Organizers did not seek approval from local authorities for the gathering, he said.

"The police used rubber bullets initially but the crowd didn’t leave. Finally, the security members had to shoot. The conflict happened when some people tried to seize guns from the police," he said.

Tun Ther Sein, regional MP from Mrauk U, said some of the critically injured protesters were taken to the state capital of Sittwe, a three-hour drive south of the ancient town studded with Buddhist temples.

The Rakhine, also known as Arakanese, are one of the 135 officially recognized ethnic groups in Myanmar. Their identity is closely connected to the once powerful Arakanese kingdom along the Bay of Bengal, which was conquered by the Burmese kingdom in 1784. The kingdom was once an important stop on the old silk trade route.

Tensions in Rakhine State have risen since a sweeping Myanmar army operation in August inflamed communal clashes where Muslims villages were attacked, it triggered an exodus of over 650,000 Rohingya to Bangladesh.