Police were preparing for protests outside government offices on Sunday
Chinese authorities have ruled out open nominations for elections to choose Hong Kong's leader.
Authorities said two to three candidates will be nominated by a "broadly representative" committee.
The decision is expected to limit the selection of candidates to pro-Beijing figures.
The pro-democracy Occupy Central movement says it will launch a sit-in in the city's central business district in protest.
The election for Hong Kong's chief executive is due in 2017 and will be the first time the holder of the post is directly chosen by voters.
The Standing Committee of China's National People's Congress said inits decision that while the election would represent "historic progress", "the sovereignty, security and development interests of the country are at stake," and therefore "there is a need to proceed in a prudent and steady manner".
The pro-democracy Occupy Central movement condemned the decision, saying it had "dashed people's hopes for change and will intensify conflicts in the society".
"We are very sorry to say that today all chances of dialogue have been exhausted and the occupation of Central will definitely happen," the group said.
Activists have promised a campaign of "disobedience" - the slogan written on this wall
Recent weeks have seen several protests from pro-democracy activists
Beijing's supporters have also staged protests against Occupy Central
On Saturday China warned foreign countries against "meddling" in Hong Kong's politics, with an article in a state-run newspaper accusing some in Hong Kong of "colluding" with unnamed "outside forces".
A foreign ministry spokesman was quoted as saying this would "absolutely not be permitted".
Fierce debate
The decision from Beijing comes in amid a huge debate in Hong Kong over its relationship with the mainland.
In June, almost 800,000 people cast ballots in an informal referendum organised by Occupy Central on how the chief executive should be chosen.
This was followed by large-scale rallies held by both sides.
Hong Kong is a former British colony now governed by China under the principle of "one country, two systems". It has retained wide legal and economic powers since being handed back to China in 1997.
But some activists are worried that China's central government is seeking to exert greater political control over the territory.
Also on Sunday, the pro-Beijing leader of the neighbouring territory of Macau was re-elected unopposed by an election committee composed mostly of Beijing loyalists.
A small group of pro-democracy activists protested outside the venue, saying the election would be meaningful only if all citizens could have a say.
More than 90% of voters who responded to a week-long unofficial referendum on the city's political future said they wanted to directly elect their leader.
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