The letter, issued late last night, comes amid the detention and monitoring of dissidents, which they believe reflects the government's anxieties about the award as well as a major political meeting that begins today.
It calls for the government to approach the award with "realism and reason" and follows a spate of angry denunciations of the prize. Yesterday a foreign ministry spokesman said the Nobel committee was "encouraging crime" in China by giving the award to Liu, who is serving 11 years for incitement to subvert state power.
A series of furious editorials and opinion pieces have also attacked Norway and the prize committee.
The letter describes Liu as "a splendid choice", adding: "We call upon the authorities to release all political prisoners and prisoners of conscience who are in detention for reasons such as their speech, their political views, or their religious beliefs. We ask that legal procedures aimed at freeing Liu Xiaobo be undertaken without delay, and that Liu and his wife be permitted to travel to Oslo to accept the Nobel peace prize."
Some signatories to the letter received threatening calls from the police even before it was published it, said Xu Youyu, a professor with the Chinese Academy of Social Sciences.
"We thought we had to say something," he told Associated Press. "The government is still doing the same things."
Other signatories include the well-known lawyers Teng Biao and Pu Zhiqiang, academic Cui Weiping, Tibetan poet Woeser and journalist Li Datong.
Li said: "He has already won the Nobel peace prize and you [the government] are still keeping him in prison … If something is right, we have to support it."
Others unconnected to the letter have also been affected. Yu Jie, author of the book China's Best Actor: Wen Jiabao , said police had met him off a flight from America.
"There are three domestic security cops who are watching me. When I am home, they are downstairs; when I go out, I have to go in their car. Now I am in the supermarket buying stuff and they are here as well," he said.
"I think it is because of Liu Xiaobo winning the prize – I am a good friend of his and they are afraid that I might participate in some related 'activities.'"
Liu's wife Liu Xia, who has been placed under house arrest , tweeted yesterday that Ding Zilin, the head of the Tiananmen Mothers, and her husband, Jiang Peikun, had disappeared. She had earlier said that Liu Xiaobo had dedicated his Nobel award to "the dead spirits of Tiananmen".
Ding and Jiang's number was unobtainable and other members of the group – made up of those bereaved by the bloody crackdown on the Tiananmen Square protests in 1989 – said they had been unable to reach Ding for several days.
"We are increasingly concerned about the escalation of measures taken against dissidents and activists at the moment," said Nicholas Bequelin, Asia researcher at Human Rights Watch.
He added: "There is a flagrant contradiction. On the one hand they argue the Nobel should not be awarded to a criminal. At the same time they are implementing unlawful measures against dozens of people, including Liu Xia."
Dissidents often face greater pressure in the run-up to major political meetings.
The party plenum, a meeting of top leaders, may be used to give Xi Jinping, heir apparent to president Hu Jintao, a promotion. But observers believe that Wen and others are pushing to at least discuss political restructuring. Wen has repeatedly raised the need for political reform in recent speeches and interviews. Most Chinese media outlets have not included those remarks in their reports although the boundary-pushing Southern Weekend ran them yesterday.
"Even the premier of our country does not have freedom of speech or of the press," a group of party elders complained in another open letter this week. It called for an end to censorship – a step seen by many as the first move towards broader changes.