About 30 anti-Posco protesters were injured after they were attacked by 200 lathi-wielding men near the proposed steel plant's site in Orissa.
Trouble began on Monday morning when anti-Posco activists were opposing the construction of a coastal road.
The road is expected to connect the Indian Oil Corporation Ltd (IOCL) refinery site with the Posco's proposed 12 million tonne steel plant.
Supporters of Posco Pratirodh Sangram Samiti (PPSS) described the attack as an administration-sponsored ploy to terrorise the agitating villagers.
"This is a very planned and calculated move to crush our peaceful democratic movement against Posco project. This is nothing but a very shameful act of Posco to terrorize the villagers. We are determined to continue our struggle democratically," spokesperson of PPSS, Prashant Paikary, said.
President of the group, Abhaya Sahu, told media that the police had prior knowledge about the planned attack on the people. The police were not far away from where the incident took place but they remained silent, he said.
Meanwhile, the National Council of Churches in India (NCCI) today condemned the attack in a letter to Prime Minister Manmohan Singh.
"We strongly condemn this heinous attack and the ongoing unholy nexus between Posco and the state government," the letter stated.
"We urge you to see that justice is done and the deal with Posco is called off, and alternate ways of people-friendly and eco-friendly development are explored."
The Posco project was conceived in 2005 and is India's single biggest foreign investment.
The project however is being strongly opposed by many groups who argue that it will create lasting environmental damage. At least 2,900 acres of the total 4,004 acres required for the project is forest land.
Earlier this month, the Church of South India (CSI), in a letter to the Prime Minister said it was disturbed and horrified to witness the cruel manner in which the government of Orissa has been suppressing the anti-POSCO movement, in particular the Dalits and other backward communities".
"Not only have they been subject to merciless beating and unjust arrests, the protesters are now also being besieged by more than one thousand police," the general secretary of CSI Synod, MM Philip, stated in the letter.
"We consider the protests of the people as struggles of the communities for land, life, livelihood and identity. They are resisting the acquisition of their own inhabited spaces forest and fertile agricultural lands and coast for the scandalous POSCO steel-power-port-mining project."
Philip said the actions of the Orissa government with the support of the Centre exhibited "gross violation of the law, callousness about the well-being of the people and the environment, and ill-conceived notions of development".
Philip demanded immediate repeal of the order that empowers the state governments to acquire lands for the large scale projects.