Rachel Goldwyn's detention came as David Mawdsley, the father of another British pro-democracy campaigner, James Mawdsley, who was sentenced to 17 years in a Burmese jail, said he feared his son was being tortured by his captors.
Ms Goldwyn, 28, from Barnes, south-west London, sang "We Will Never Forget" and demanded civil rights for the country in front of a crowd of 300 students.
She is a researcher for the Democratic Burmese Students' Organisation (UK). Last night it said she was arrested in a busy Rangoon market.
"Shackled at the ankles, she sang a revolution song and shouted pro-democracy slogans for 15 minutes before the military police dragged her into a van and drove off through the shouting crowds." The statement said students who sang the song in 1995 in Rangoon received 20-year prison sentences.
Ms Goldwyn's mother, Charmian, said she and her husband, Ed, were desperately worried for Rachel, the youngest of their three daughters. Ms Goldwyn studied economics at the London School of Economics and became interested in the Burmese pro-democracy movement while working in a refugee camp in Thailand two years ago.
Mrs Goldwyn said Rachel told her she was going to Germany. "We did not hear until about three hours ago that she had been arrested in Burma. I am very proud of her but I also desperately wish she hadn't done this."
A Foreign Office spokesman said that attempts were being made to get access to Ms Goldwyn. The British consul was still waiting to see Mr Mawdsley.
He added: "The deputy head of the mission ... has asked for the following information: Why has [Rachel] been arrested; why has she been detained; and has she got legal representation? We want access ... under the Vienna Convention."
James Mawdsley was found guilty of entering Burma illegally and carrying anti-government literature. He had been deported twice for pro-democracy protests and spent 99 days in solitary confinement in a Burmese jail last year.
David Mawdsley spoke out after the British consul, Tiffany White, was sent to the jail in the town of Kengtung, where James, 26, was being held.
Mr Mawdsley said his son was tortured during his last spell in captivity. "Last time we kept quiet about the torture. Then we were keeping a low profile. This time James has been sentenced to 17 years and we want people to know what is happening."Reuse content