YANGON (REUTERS) - Myanmar police launched a crackdown overnight in a Yangon district after breaking up a protest to oppose a military appointed local official, as the World Bank halted payments to projects in the country that were made after the Feb 1 coup.

The South-east Asian country has been in crisis since the army seized power and detained the civilian government leader Aung San Suu Kyi and much of her party leadership after the military complained of fraud in a November election.

Riot police fired tear gas in Yangon's Tamwe neighbourhood to disperse a crowd protesting against the replacement of an official in charge of the district by one appointed by the military, according to witnesses and live-streamed video.

Residents said they heard repeated shots and that police had remained in some parts of the district until around 2am on Friday.

"We were really scared," said one of the residents, who asked not be named.

Residents found what appeared to be fragments of stun-grenade casings on the streets in the morning, along with numerous flip-flops abandoned by fleeing protesters.

State media said legal action would be taken against 23 people, 10 of them women, in connection with the protest.

The confrontation illustrates the defiance the military is facing in various walks of life as it seeks to reimpose its authority on a population that had been growing used to civilian rule under Ms Suu Kyi's government.

There have been daily protests and strikes by pro-democracy supporters for about three weeks, often drawing hundreds of thousands of people across the diverse nation stretching from the country.

Earlier on Thursday, violence broke out in Yangon when a crowd of about 1,000 military loyalists attacked pro-democracy supporters and media.

Several people were beaten by groups of men, some armed with knives, others firing catapults and hurling stones, witnesses said. At least two people were stabbed, video footage showed.

The threat of violence did not stop another protest in Yangon on Friday by hundreds of mostly young people, which ended quickly when police moved in to disperse the crowd and detained several people, witnesses said.

"This is very important for our future," protester Mr Nyein Chan Sithu, 21, said of the demonstrations.

"We want a government that treats people with respect. My generation will be the last to fight a junta."

In another act of resistance, media organisations said on Thursday they would not comply with an order to refrain from using words like "coup" to refer to the ouster of the elected government.

Such defiance would have been unthinkable under previous juntas that ruled Myanmar for almost 50 years until the generals began to relinquish power in 2010.

A spokesman for the ruling military council did not respond to telephone calls seeking comment.

The army said its overthrow of the government was within the Constitution after its complaints of fraud in the Nov 8 election, swept by Ms Suu Kyi's party, had been ignored.

The election commission said the vote was fair.

The crisis raises the prospect of growing international isolation and investor jitters compounding difficulties for an economy already weighed down by the coronavirus.

Facebook said that due to the "deadly violence" since the coup it had banned the Myanmar military from using its Facebook and Instagram platforms.

Military chief General Min Aung Hlaing says authorities are using minimal force. Nevertheless, at least three protesters and one policeman have been killed in violence.

World Bank halts payments

The World Bank has halted payments to projects in Myanmar on withdrawal requests that were made after the coup, the bank said in a letter to Myanmar's finance ministry seen by Reuters.

World Bank President David Malpass said last week it was taking an "extra cautious" approach to Myanmar but was continuing to execute past projects, including emergency coronavirus relief.

Last year, the World Bank approved over US$350 million (S$464.23 million) in new loans and grants to aid Myanmar's pandemic efforts and to support farmers and rural employment.

The United States, Britain and others have called for Ms Suu Kyi's release and the restoration of democracy, and have imposed limited sanctions aimed at members of the junta and its business links.

Britain said on Thursday it would sanction six more military figures, adding to 19 previously listed and including Gen Min Aung Hlaing.

The army has promised a new election after reviewing voter lists. It has not given a date but it imposed a one-year state of emergency when it seized power.

Ms Suu Kyi has been detained incommunicado at her home in the capital Naypyitaw but her party says its November victory must be respected.

The question of a new election is at the centre of a diplomatic effort by the Association of Southeast Asian Nations (Asean), of which Myanmar is a member, aimed at easing the crisis.

Indonesia has taken the lead in the attempt and its foreign minister, Retno Marsudi, met her military-appointed Myanmar counterpart, Wunna Maung Lwin, for talks in Thailand this week.

But Indonesia's intervention has raised suspicion among coup opponents who fear it will confer legitimacy on the junta and its bid to scrap the November vote and arrange a re-run.

Ms Retno did not mention an election in comments to reporters after her talks but emphasised "an inclusive democratic transition process".