Speaking to Aljazeera, journalist Hassan al-Rashidi who visited the town on Monday said the situation was peaceful, but Moroccan security forces were present.
A government official said a section of the Sahrawi people had taken advantage of the unrest to set fire to the Moroccan flag, causing tensions.
He described the intervention of security forces as necessary to prevent violence and destruction of private property.
The riots in Laayoune reflected the precariousness of the ceasefire agreement, signed between the breakaway Algerian-backed Polisario Front and the Moroccan government in 1991, al-Rashidi said.
Tension could yet escalate and even explode into a full-blown war, unless the parties concerned worked towards a negotiated settlement, he said.
Tension could yet escalate into a
full-blown war in Western Sahara
Earlier, Moroccan authorities charged 33 youths for taking part in the riots.
Provincial Governor Muhammad al-Rharabi said in Laayoune on Sunday the 33 youths would be tried for criminal conspiracy, disturbing public order and damage to public property during the riots, which residents and local reporters said took place on Tuesday and Wednesday.
"The riots had been organised with a political agenda," al- Rharabi said.
Police were looking for other suspects for burning Moroccan flags and for brandishing flags of the breakaway Algerian-backed Polisario Front.
The riots were triggered by the transfer of a convict from a jail in Laayoune to one in Morocco, the governor said.
The inmate, sentenced two years ago on charges including drug trafficking and insulting the monarchy, has rejected the verdict, saying he was not a Moroccan national and asked to be transferred to Polisario camps in Algeria, legal sources said.
The exiled Polisario Front, which seeks independence for the Moroccan-controlled, mineral-rich territory, has called the riots an "uprising".
"The United Nations and the Security Council must intervene rapidly to put an end to the repressive practices of Moroccan authorities against the defenceless Sahrawi people"
Muhamaed Ould Salih,
The front called on the UN on Sunday to urgently intervene to protect the people of Western Sahara after what it described as "fierce repression" of demonstrations there by Moroccan authorities.
"The United Nations and the security council must intervene rapidly to put an end to the repressive practices of the Moroccan authorities against the defenceless Sahrawi people," Muhammad Ould Salih, in charge of foreign relations for the armed independence movement, said.
Algeria has traditionally backed the territory's independence movement based in southwestern Algeria.
Morocco annexed the territories after colonial power Spain withdrew in 1975.
Polisario conducted a low-intensity guerrilla war until the UN negotiated a ceasefire in 1991, with the promise of holding a referendum to decide the territory's fate.