An armed Police Force man was killed during the violent clash that broke out after unidentified gunmen killed Mohit Khan in Kapilvastu district on Sunday morning, according to officials.
Khan was chief of the district's vigilante group, set up to counter the Maoists during the armed conflict.
Local residents and supporters of Khan staged protests, which soon turned violent, prompting the authorities to clamp curfew in parts of Rupandehi and Kapilvastu districts.
Protesters lobbed a bomb at an Armed Police Force team at Chanuata, killing Constable Hasan Puri.
The irate locals set ablaze a mosque at Butawal Municipality and also set on fire a Maoist contact office at Taulihawa alleging that those who killed Khan were the Maoist cadres.
The mob also vandalised a dozen vehicles including two having Indian number plates and looted a dozen shops and restaurants in the area. Police said at least 300 houses in the Chandrauta area have been set ablaze.
Curfew was imposed in the afternoon for indefinite period to control the situation.