"This is how they plan to protect the community? We don't want them," said Gloria Perez Torres, grieving over the body of her brother, Mario, 56, who was killed in the clash.
Antunez was calm again Tuesday, and self-defense groups remained armed and in control.
In the city of Apatzingan, hundreds of federal police offices traveling in pickup trucks with machines guns mounted on the top, armored vehicles and buses amassed in the city square as residents watched.
"The federal police have been here for years but they don't do anything," said a man sitting on a bench at the plaza who identified himself only as Ivan.
Security analyst Alejandro Hope, who formerly worked for the country's intelligence agency, called the government's strategy in Michoacan a "disaster."
After initially arresting the vigilantes months ago, the federal government appeared to be working with them recently. The army and Federal Police have provided helicopter cover and road patrols while the self-defense groups attacked the cartel, but never intervened in the battles.
"Last week they were protecting the vigilantes," said Hope, director of security policy at the Mexican Competitiveness Institute. "Secretary Osorio practically said they were useful ... now they're going to put them down with firepower and bloodshed?"
The government doesn't agree with that assessment, said an official with the Interior Ministry who was not authorized to speak to the press by name.
"It's a strategy that's being adjusted, modified based on the demands of what is happening on the ground," the official said.
The government sent more troops and federal police late Monday to retake an area known as the Tierra Caliente after days of violence between the vigilantes and the Knights Templar cartel. Interior Minister Miguel Angel Osorio Chong urged the vigilantes to put down their arms and return to their home communities, saying the government would not tolerate anyone breaking the law.
Osorio Chong announced the new strategy following a weekend of firefights as the vigilantes extended their control to the communities of Antunez, Paracuaro, and Nueva Italia. Burning trucks and buses blocked highways. Two bodies were found hanging from a bridge.
The late Monday night confrontation in Antunez occurred after townspeople were called to meet a convoy of soldiers who they were told were coming to disarm the self-defense group. Witnesses said the civilian group did not carry guns, but as they blocked the military convoy, some soldiers fired into the crowd.
"They opened fire on civilians. How it that justified?" Defense group spokesman Estanislao Beltran told MVS radio. He told The Associated Press that only one of the dead was a self-defense group member.
Beltran said the confrontation was with about 60-80 soldiers. There were at least as many civilians, according to witnesses.
"We don't have confidence in the government," he said. "We've asked for help for years and have received the same. The government is compromised by organized crime."
The vigilantes have surrounded the farming hub of Apatzingan, considered the command post of the Knights Templar, but had said they were not going into the main city at the army's request.
Almost every store was closed in Apatzingan and there were few people on the street and little police presence.
Rumors circulate that some self-defense groups have been infiltrated by the New Generation cartel, which is reportedly fighting a turf war with the Knights Templar in the rich farming state that is a major producer of limes, avocados and mangos. The self-defense groups vehemently deny that.
In an odd twist to the story, the coordinator of the vigilantes, Dr. Jose Manuel Mireles, appeared in a video on the Televisa network late Monday night saying the federal government is doing what the vigilantes want and urged them to heed Osorio Chong and return to their daily lives.
Mireles is recovering from an airplane crash earlier this month that broke his jaw and ribs. He is in an undisclosed location and has been under heavy Federal Police protection. Many criticized the government for not arresting him, as the vigilantes use high-caliber arms that are only legal for the military.
On Televisa, Mireles' face was swollen and he spoke slowly, as if under sedation.
Later, in a second video, Mireles appeared more alert. He told reporters in the room that he is not advocating the laydown of arms until the entire state of Michoacan is free of organized crime and operating under the rule of law.
Associated Press writers E. Eduardo Castillo and Katherine Corcoran contributed to this report from Mexico City.