Mexican soldiers and federal police openly confronted vigilantes in a tense standoff, after a new government campaign to stop violence in western Michoacan state turned deadly.
There were widely varying reports of casualties on Tuesday.
Associated Press news agency journalists saw the bodies of two men reportedly killed in a clash that began late on Monday between soldiers and townspeople in Antunez and spoke with the family of a third man that said he had also died in the incident.
No women or children died, contrary to reports by the spokesman for one of "self-defence" groups that have sprung up over the past year to challenge a drug cartel.
The clash occurred as the government sent more troops to the so-called Tierra Caliente, where the vigilantes have been fighting the Knights Templar cartel.
Call to disarm
The government on Monday had called on the self-defence groups to disarm.
By Tuesday afternoon, vigilantes blocked roads leading into towns under their control, and federal police manned their own roadblocks outside.
One federal officer who was not authorised to speak to the press said they had no orders to disarm anyone, or to try to take vigilante-held towns.
The Attorney General's Office said it could not confirm the death toll.
The Interior Ministry said it had no information about reports from people in Antunez that soldiers arriving in the town on Monday night fired on an unarmed crowd.
"This is how they plan to protect the community? We don't want them," said Gloria Perez Torres, grieving over the body of her brother, Mario, 56, who was killed in the clash.
In the city of Apatzingan, hundreds of federal police offices travelling in pickup trucks with machines guns mounted on the top, armoured vehicles and buses massed in the city square as residents watched.
"The federal police have been here for years, but they don't do anything," said a man sitting on a bench at the plaza who identified himself only as Ivan.
Security analyst Alejandro Hope, who formerly worked for Mexico's intelligence agency, called the government's strategy in Michoacan a "disaster".
After initially arresting the vigilantes months ago, the federal government under Interior Minister Miguel Angel Osorio Chong appeared to be working with them recently.
The army and Federal Police have provided helicopter cover and road patrols while the self-defence groups attacked the cartel, but never intervened in the battles.