More than 20 protesters and police officers were injured.
|The protestors were demonstrating against a planned demolition of the building [AFP]
Baek said police had no choice but to move in because the protesters continued hurling cocktails, bricks and golf balls and spraying acid at officers and passers-by.
Dozens of tenants in the largely commercial Yongsan area, slated for major redevelopment, have been battling with police since Monday as they demand better compensation.
"Policemen were firing water cannons onto the roof of the building where protesters were throwing down Molotov cocktails to resist a possible raid," a witness at the site told Reuters.
Another witness said: "The police were going at them as if they were out to kill them," referring to the protesters.
The fatalities come two days after Lee Myung-bak, the South Korean president, replaced his police chief, who was widely criticised for being too hard on anti-government protesters.
He has ordered an immediate investigation into the deaths.
Lee, who has seen is popularity levels plunge to record lows, was faced with months of street protests last year over his decision to open the country to US beef imports.