Columns of police abandoned their positions around a protest camp and state buildings occupied by demonstrators who are enraged at Mr Yanukovich's decision to spurn an EU trade deal and move Ukraine further into Russia's orbit.
Overnight, the police had cleared streets near the protest camp, bulldozed tents and skirmished with demonstrators. They later surrounded the City Hall, where protesters, who have set up a makeshift hospital in the occupied building, sprayed them with water hoses to prevent it from being stormed.
The manoeuvres by hundreds of black-clad police with visors and helmets were the boldest steps the authorities have taken so far against demonstrators. Their sudden withdrawal, however, suggests they were not prepared to use full force.
At stake is the future of a country of 46 million people, torn between the popular hope of joining the European mainstream and the demands of former Soviet master Russia, which controls the flow of cheap natural gas Kiev needs to stave off bankruptcy.
At the main protest camp on Independence Square, pop stars, politicians and priests pleaded with police not to shed blood. Opposition politicians called for mass demonstrations to protect the square and predicted that Mr Yanukovich would soon be toppled.
The interior minister called for calm and promised that the square would not be stormed. But even after the police left the streets, Vitaly Klitschko, a world boxing champion who has emerged as one of the main figures of the opposition, said the overnight action had "closed off the path to compromise".
He added: "We had planned to have talks with Yanukovich. We understand Yanukovich has no wish to talk to the people and only understands physical force."
The police incursions energised the protests and drew thousands of people back out into the streets to defend the camp, many wearing plastic hardhats in orange, the colour that symbolised the successful popular revolt against a fraudulent election in 2004.
Police had been bussed in to the city centre under darkness to shouts of "Get out criminal" - a reference to Mr Yanukovich, who suspended plans to sign a trade pact with the European Union last month and instead embraced closer ties with Russia.
Riot police flooded roads to Independence Square, where thousands of people have maintained a vigil in the bitter winter cold. Officers moved slowly into the camp, bulldozing tents and barricades with tractors mounted with shovels.
Dozens of demonstrators and police were hurt in scuffles, but several officers said they had orders not to use force.
The action stalled after day broke, with temperatures in the snowbound capital stuck at -8°C (17°F). Some riot police left to cheers from lines of protesters holding them back. At City Hall, demonstrators lobbed a Molotov cocktail from a window into a police truck before the officers withdrew.
European leaders say the trade pact with Ukraine would have brought investment, but the country's Soviet-era industry relies on Russian natural gas, giving Moscow enormous leverage.
Prime Minister Mykola Azarov said yesterday he had told European leaders they would need to provide Kiev with €20 billion in aid for Ukraine to sign the stalled pact with Brussels.
He also promised that a meeting with Russian officials set for December 17 would not include talks on joining a Moscow-dominated customs union, a main fear of the opposition.
Western countries spoke out strongly against use of force.
US Secretary of State John Kerry said. "The US expresses its disgust with the decision of Ukrainian authorities to meet the peaceful protest in Kiev's Maidan Square with riot police, bulldozers, and batons, rather than with respect for democratic rights and human dignity. This response is neither acceptable nor does it befit a democracy."
EU foreign policy chief Catherine Ashton and US Assistant Secretary of State Victoria Nuland were both in Kiev, part of an aggressive diplomatic campaign to lure Ukraine back Westwards.
Ms Nuland met the protesters and Mr Yanukovich, and after two hours of talks with the president, she said she had complained to him about tactics that were "absolutely impermissible" in a democratic society.
Interior Minister Vitaly Zakharchenko called for calm, adding: "There will be no storming of the square. No one will violate your rights to protest peacefully, but do not ignore the rights of other citizens."