Tens of thousands of supporters of Bahrain's Shia-led opposition poured into the streets of Manama on Tuesday calling for the government's downfall in the largest rally in more than a week of protests.

Streets of the capital were clogged with protesters marching towards Pearl Square, the focal point of anti-regime protests, an AFP correspondent said.

Those leading the protest carried a large banner reading, "The march of loyalty to martyrs", while a poster strung from a bridge read in English, "No dialogue before the downfall of the ruling regime."

The banner carried by the crowd bore the photographs of seven "martyrs" killed by security forces, the last of whom succumbed to his wounds Monday and was buried earlier Tuesday.

"The people want the fall of the regime," protesters chanted in unison, as they waved red-and-white Bahraini flags.

Women in black veils chanted slogans against Bahrain monarch Hamad bin Issa Al-Khalifa.

"May your hands be paralysed, Hamad," they shouted.

"Down down Khalifa," the crowds chanted, condemning Prime Minister Sheikh Khalifa bin Salman, the uncle of king Hamad who has been in office since 1971 and who is widely despised by the Shia.

The rally marked the first to be officially called for by political associations since protests started on February 14 in response to calls by cyber activists inspired by uprisings in Tunisia and Egypt.

Tuesday's protest comes after pro-government Sunnis rallied in their thousands at a Manama mosque Monday evening pledging loyalty to the al-Khalifa family, and calling on protesters to answer an invitation by Crown Prince Salman bin Hamad to engage in wide-reaching dialogue.

The rally also comes a day after King Hamad bin Isaa al-Khalifa answered a crucial opposition demand by ordering the release of political prisoners and halting trial procedures against others.

Shia opposition MP Abduljalil Khalil told AFP the prisoner release was an opposition demand so Crown Prince Salman could "prove his seriousness in calling for dialogue."

The Islamic National Accord Association (INAA) which is the main Shia formation and controls 18 seats in the 40-member parliament, had demanded along with other opposition groups, the release of prisoners before considering the crown prince's call for dialogue.

INAA quit the parliament last week in protest at security forces opening fire on demonstrations, during which seven people were killed and scores injured.

The protester buried on Tuesday, 20-year-old Redha Mohammed, died of his wounds on Monday after being shot by police three days earlier.

A senior opposition figure, Hassan Mashaima, who was being tried in absentia has said he plans to return home on Tuesday, adding yet more pressure on the royal family for reform.

A leader of the opposition Haq movement, Mashaima told AFP before King Hamad's pardon was announced he would return to Manama but had "no guarantees" he would not be arrested on arrival.

"I have decided to return to my country," said Mashaima, a Shia who is currently in London and faces charges of terrorism in his native Bahrain, along with 24 others.

The names of those included in the king's pardon will be announced on Tuesday, state news agency BNA reported.

The Gulf kingdom has been in turmoil since police very early last Thursday stormed Pearl Square as protesters were asleep, killing four people and wounding scores.

More clashes broke out on Friday after the army vowed to restore order.

On Saturday the army was pulled back to bases and all security forces were also ordered to stay away from protesters, who ever since have crowded Pearl Square to demand the end of the Al-Khalifa dynasty which has ruled for centuries.

The political upheavals have forced the cancellation of next month's Bahrain Formula One Grand Prix and authorities fear the economy of the small archipelago will be dented.

Bahrain has dwindling oil resources, while tourism from neighbouring Saudi Arabia is a significant source of revenues for many.

Standard and Poor's said on Monday it was downgrading Bahrain's credit rating by one notch and could lower it further.

"There is no work. There are no tourists, and foreign residents who usually go out are staying home," said a dejected taxi driver.