The violence, which began late on Saturday and continued till early Sunday, erupted after around 25,000 people marched from parliament to the Prime Minister's house, where some attempted to remove barricades around it with cranes, an AFP reporter at the scene said.
Police responded with tear gas and rubber bullets.
Islamabad police chief Khalid Khattak told AFP police exercised restraint but the protesters were armed with axes, wire cutters and hammers.
"They had a crane and drove it until the entrance of the presidency. We are using only tear gas and firing rubber bullets where needed," Khattak said.
Railways minister Khawaja Saad Rafique said protesters tried to uproot the entry gate of the prime minister's house.
The protesters, led by cricketer-turned-politician Imran Khan and populist cleric Tahir-ul-Qadri, had been camped outside parliament house since August 15 demanding Prime Minister Nawaz Sharif quit amid allegations of vote rigging.
The crisis took on a new dimension earlier in the week after the government asked the powerful army to mediate, raising fears the military would use the situation to enact a "soft coup" and increase its dominance over civilian authorities.
"There are 1,600 to 2,000 trained terrorists. They have 200 women who are trained in the use of firearms and they have come with the intention of occupying state buildings," Defence Minister Khawaja Asif told AFP as the fighting broke out late on Saturday.
"These are buildings that are symbols of the state," he said. "Their attempts are being resisted. And we will resist these with full force."
AFP's correspondent at the scene said protesters were carrying batons, iron rods and sling-shots.
The injured were rushed to Islamabad's two main hospitals, and the number of casualties is expected to rise as clashes continue.
Wasim Khawaja, spokesman for the Pakistan Institute of Medical Sciences hospital in Islamabad, told AFP 184 injured had been taken there, while the Poly Clinic hospital said it had received 130 wounded.
"The condition of two of them was critical. There were more than 20 policemen among the injured," Khawaja said, with a second doctor confirming that figure.
Khawaja also said most of the victims had been injured by rubber bullets, and that 35 of them were women.
At the Poly Clinic hospital, spokesman Khurram Ghuman told AFP: "There are 20 women among them and most have been affected by tear gas, but they all are in stable condition."
A 15-month-old toddler was also brought in and Ghuman appealed for the parents to take the baby, who was safe and sound.
Private TV channels broadcast footage of protesters breaking the outer iron grill of parliament house and entering at the outer lawn but without entering the main building.
Demonstrations have also erupted in the eastern city of Lahore and the port city of Karachi.
The protests remained peaceful in Karachi, however.
Khan and Qadri claim the 2013 elections which saw Sharif sweep to power were massively rigged.
Local and foreign observers said the polls were credible, and analysts believe the protests have been coordinated by the powerful army as a means of re-asserting its dominance over civilian authorities.
Paramilitary troops and soldiers standing guard to protect the PM's house as well as other sensitive installations have not yet been called into action, despite the violence Sunday.
WOMEN AND CHILDREN
Women and children have been prominent among both protest groups, and the rising number of casualties is set to further polarise the already embittered political atmosphere.
But government officials defended the use of force. "The demonstrators attacked first. They wanted to occupy the prime minister's house and stage a sit-in there," said Sharif aide Asif Kirmani.
Qadri, however, said the government started the violence.
"The march is heading to its destination, we were peaceful but government began the bloodshed," he said.
Khan told Express News during the clashes that he was inside a shipping container in front of the prime minister's house.
We will continue our struggle against the government, till our last breath," Khan said, calling for demonstrations across Pakistan.
Qadri was in a bullet-proof car close to the scene, according to television images.
The government earlier struck a defiant note, issuing a statement saying that Sharif would not be stepping down.
"There is no question of resignation or proceeding on leave by Prime Minister Muhammad Nawaz Sharif, nor any member from the government side has made such suggestion," it said.
Sharif had earlier dismissed the impasse as a "tiny storm" that would end soon.
Khan alleges the 2013 polls were rigged as part of a conspiracy involving the former chief justice and thousands of election commission workers.
Qadri has demanded wholesale changes to the political system, and called for an interim "unity government" while they are implemented.
The protest leaders have drawn thousands to the streets of Islamabad, but their call has not mobilised mass support in a country of 180 million people.