About 10,000 Bhutanese refugees demonstrated at the India-Nepal border, where a day earlier Indian troops had opened fire, killing one refugee.
The refugees gathered at the Nepalese border town of Karkarvitta, about 550 kilometers (340 miles) east of the capital of Katmandu, to protest the shooting, and more were expected, local police official Diwakar Katwal said by telephone.
Police stopped the refugees from marching to a border bridge to head off possible violence, he said.
He said they were chanting slogans against Indian officials.
Thousands of Bhutanese refugees have been camping at the border area for the past three days, demanding they be allowed to march through Indian territory back to their homeland, the same route they traveled to Nepal in the early 1990s.
"We want free passage through India to Bhutan, the same way we were brought here," chanted the refugees, according to Katwal.
More than 100,000 ethnic Nepalis a Hindu minority in Bhutan for centuries have been living as refugees in eastern Nepal since the early 1990s, when they were forced out by Bhutanese authorities who wanted to impose Buddhist culture across the country.
Most have been living in U.N.-run camps for the last 16 years.
Bhutan is unwilling to receive the refugees back, saying most left voluntarily and renounced their citizenship.
Authorities and human rights activists were holding talks with Indian officials on the Indian side of the border, Nepal's Home Ministry spokesman Baman Newpane said.
Meanwhile, Indian authorities released 15 of the protesters who were taken into custody during the past two days, the area's most senior Indian administrator, Rajesh Pandey, told The Associated Press.
"The situation is under total control, but we have not lowered our guards," Pandey said.
Pandey said he and his officers held a meeting with Nepalese officials at the border Wednesday to explore more ways to restore normalcy.
"It was a good meeting and we expect that the Nepalese officials will be able to talk to the people there and persuade them not to resort to violence or force their way," he said.