TWO policemen were shot dead overnight when they opened fire with rubber bullets to disperse a protest against public transport price hikes and protesters fired back with real bullets.

Riot police and helicopters descended on the University of El Salvador to remove hundreds of protesting youths when both sides started to fire weapons. It was unclear who fired first.

"Two policemen are dead and several other police and a (helicopter) pilot are injured," El Salvador's President Tony Saca said. "They (the police) had rubber bullets and they received (real) bullets that ended their lives."

Mr Saca, whose government raised public transport prices on the weekend, said the protesters took refuge inside the university but said he had no plans to evict them.