Hundreds of residents in a New Delhi slum are resisting eviction by city officials and police in the third such protest this month in India's capital city, as anger mounts over a shortfall in housing for the urban poor, campaigners said.

Evictions began this week in Kathputli Colony, home to 3,500 families of street performers and puppeteers, after authorities marked it for development as part of a plan to upgrade the city.

City officials say residents were notified of the plan which involves moving them to a temporary location while a private builder constructs modest high-rise homes for a nominal sum.

They say more than 500 families have already moved to temporary accommodation.

"Residents were given sufficient notice. The police are on hand to maintain law and order," said J.P. Agrawal, a principal commissioner with the Delhi Development Authority (DDA).

But some residents said they were not given the option of relocation, and that they received no notice of the eviction.

"No one told us it would be this week. Suddenly one morning we woke up and found hundreds of policemen in the colony," said Dilip Bhatt, head of an artistes' cooperative in the settlement.

"We are surrounded by the police like we are criminals, and they have cut off water and power," he told the Thomson Reuters Foundation.

Television images showed police in riot gear, holding assault rifles and shields as residents gathered around them.