A state of emergency has been declared in a central Burmese town where at least 20 people have been killed in violence between Buddhists and Muslims.

Burmese President Thein Sein made the announcement in a statement broadcast on state television today.

The government's struggle to contain the unrest in the town of Meikhtila is proving another major challenge for his reformist administration as it attempts to chart a path to democracy after nearly half a century of military rule that once crushed all dissent.

Residents of Meikhtila remain locked in their homes, too afraid to walk the streets.

Opposition National League for Democracy politician Win Htein said that at least five mosques were burned down since the violence started on Wednesday in the town.

He said there was no immediate sign of fresh violence but the situation remained tense.

And he said fires continued to burn but angry Buddhist residents and monks prevented the authorities from putting out fires set to Muslim homes.

The violence was the latest sectarian unrest after clashes in western Rakhine state last year left more than 200 dead.