The martial law-style order - read on Bahrain state TV - comes a day after more than 1,000 Saudi-led troops arrived to help prop up the U.S.-backed regime in the first major cross-border action against the revolts that have erupted across the Arab world.
A security official in Saudi Arabia said a Saudi sergeant was shot and killed by a protester on Tuesday in Bahrain's capital, Manama. No other details were immediately given on the death of the soldier, identified as Sgt. Ahmed al-Raddadi.
But, if true, it would mark a dramatic shift in the tactics by the opposition, which has displayed no weapons and has adopted the chant of "peaceful" as a main slogan. The Saudi official spoke on condition of anonymity because he was not authorized to talk to the media.
The dispatch of troops from Gulf allies on Monday highlighted the regional worries about possible spillover from Bahrain, where members of a majority Shiite population have led a month of relentless protests against the Western-backed Sunni dynasty to try to break its monopoly on power.
Other Gulf leaders fear that concessions by Bahrain's rulers could embolden more protests against their own regimes, which have already confronted pro-reform cries in Oman, Kuwait and Saudi Arabia. There are also fears that gains by Bahrain's Shiite Muslims could offer a window for Shiite power Iran to expand its influence on the Arab side of the Gulf.
The emergency law statement said the head of Bahrain's armed forces has been authorized "to take necessary steps to restore national security."
Hours before the announcement, Bahrain's capital was in lockdown mode with stores and schools shuttered and main highways blocked by police.
In Tehran, Iran's Foreign Ministry spokesman, Ramin Mehmanparast, denounced the presence of foreign troops in Bahrain as "unacceptable" and predicted it would complicate the kingdom's political crisis. Iran holds no deep political ties to Bahrain's Shiite groups, but some Iranian hard-liners in the past have hailed their efforts for greater rights.
Bahraini opposition groups also have strongly condemned the military move, calling it an occupation that pushes Bahrain dangerously close to a state of "undeclared war."
The United States - which relies on Bahrain as a pillar of its military framework in the Gulf - has urged Americans to avoid travel to the island nation due to "the potential for ongoing political and civil unrest." The State Department statement also advised Americans currently to consider leaving Bahrain, which hosts the U.S. Navy's 5th Fleet.
Thousands of protesters held their ground in Manama's Pearl Square, the symbolic center of their revolt. But opposition leaders have not yet announced their next move.
Mansoor al-Jamri, editor of the main opposition newspaper, Al-Wasat, said pro-government mobs stormed the paper's printing facilities early Tuesday and smashed equipment with metal pipes, clubs and axes. The paper is now using presses from other papers to publish.
Shiites account for 70 percent of Bahrain's population of some 525,000, but are widely excluded from high-level political or security posts. The protesters also demand the repeal of a government policy to offset the Shiite demographic advantage by giving citizenship and jobs to Sunnis from other Arab nations and South Asia.
The protests began last month with calls for the monarchy to give up most of its powers to the elected parliament. But as violence has deepened, many protesters now say they want to topple the entire royal family.
A statement Monday on the state-run Bahrain News Agency said troops from the six-nation Gulf Cooperation Council's Peninsula Shield Force have been deployed "in line with the principle of common destiny bonding." The bloc is made up of Saudi Arabia, Oman, Kuwait, Bahrain, Qatar and the United Arab Emirates.
Saudi Arabia and the UAE have announced roles in the Bahrain force, but the contributions from the other countries were not immediately clear.
The reason for the mission was "the common responsibility of the GCC countries in maintaining security and stability," the statement said.
The Peninsula Shield Force was created in the 1980s. Military units under a GCC command have been sent to Kuwait, including during the 1991 U.S.-led campaign to oust Saddam Hussein's force and in 2003 before the U.S.-led invasion of Iraq. The current action marks a significant shift to help a government quell internal unrest.
Jane Kinninmont, a senior research fellow and Bahrain expert at the London-based think tank Chatham House, said Monday's operation "changes the role of the GCC," which has always had collective defense pacts.
"The idea of gathering together to protect a government against its own people seems to be quite another thing," Kinninmont said.
Associated Press writers Brian Murphy in Dubai, United Arab Emirates, Nasser Karimi in Tehran, Iran, and Maamoun Youssef in Cairo contributed to this report.