The problem began when Moroccan police broke up a large encampment in the area on Monday, where about 12,000 people had gathered. The camp was set up last month to protest against social conditions in the former Spanish territory.
Moroccan officials have confirmed 12 deaths, the latest a young man who had been injured while demonstrating against the crackdown. Morocco says 10 of those killed in the clashes were members of the security forces.
On Wednesday, Morocco announced that its forces had arrested 163 people, but denied reports that a Sahrawi independence activist had disappeared.
According to the Polisario Front, more than 2,000 people have been arrested, while they also say that violence has spread to Smara, 240 kilometres east of Laayoune.
Western Sahara was annexed by Morocco after Spanish settlers withdrew in 1975, but the Polisario Front fought the Moroccan presence until a United Nations-brokered ceasefire in 1991.
The Polisario Front now wants a referendum on self-determination, with independence as one of the options. Morocco has so far rejected any proposal that goes beyond greater autonomy.
The third round of informal talks between the Polisario Front and Morocco on Western Sahara’s future ended on Tuesday near New York. Both sides agreed to meet again in December.