Political parties and rights groups condemned the incident as a violation of human rights saying the woodcutters, in search of jobs, were picked up from a bus and killed in cold blood.
They demanded a probe independent of the AP government and by a Supreme Court judge.
Meanwhile, Tamil Nadu government announced a solatium of Rs three lakh each to the kin of labourers who were killed yesterday in the police action.
He said while the police will justify the incident, initial reports said that those killed were unarmed.
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With protests emanating from across the border, Andhra Pradesh government's media advisor Parakala Prabhakar maintained that it was an encounter in which "smugglers" attacked policemen with sickles, stones and axes.
"It was purely as a self-defence our forces opened fire when they were outnumbered by the smugglers. Previously we had lost 6 brilliant officers at the hands of smugglers," he said refuting allegations that they were shot from the close range and in cold blood.
A team of Tamil Nadu revenue and police officials have been sent to Tirupati in Andhra Pradesh to bring back the bodies of those killed.
Bus services to and from Andhra Pradesh were suspended by both the Tamil Nadu and Andhra Pradesh State transport corporations with a posse of police personnel deployed in bus stations following stone pelting incidents.