We present Ulysses and NEAR data from the detection of the short or intermediate duration ( 2 s ) gamma-ray burst GRB~000301C ( 2000 March 1.41 UT ) . The gamma-ray burst ( GRB ) was localised by the Inter Planetary Network ( IPN ) and RXTE to an area of \sim 50 arcmin ^ { 2 } . A fading optical counterpart was subsequently discovered with the Nordic Optical Telescope ( NOT ) about 42 h after the burst . The GRB lies at the border between the long-soft and the short-hard classes of GRBs . If GRB~000301C belongs to the latter class , this would be the first detection of an afterglow to a short-hard burst . We present UBRI photometry from the time of the discovery until 11 days after the burst . We also present JHK photometry obtained with UKIRT on 2000 March 4.5 UT ( 3.1 days after the burst ) . Finally , we present spectroscopic observations of the optical afterglow obtained with the ESO VLT Antu telescope 4 and 5 days after the burst . The optical light curve is consistent with being achromatic from 2 to 11 days after the burst and exhibits a break . A broken power-law fit yields a shallow pre-break decay power-law slope of \alpha _ { 1 } = -0.72 \pm 0.06 , a break time of t _ { break } = 4.39 \pm 0.26 days after the burst , and a post-break slope of \alpha _ { 2 } = -2.29 \pm 0.17 . These properties of the light curve are best explained by a sideways expanding jet in an ambient medium of constant mean density . In the optical spectrum we find absorption features that are consistent with Fe ii , C iv , C ii , Si ii and Ly \alpha at a redshift of 2.0404 \pm 0.0008 . We find evidence for a curved shape of the spectral energy distribution of the observed afterglow . It is best fitted with a power-law spectral distribution with index \beta \sim - 0.7 reddened by an SMC -like extinction law with A _ { V } \sim 0.1 mag . Based on the Ly \alpha absorption line we estimate the H i column density to be \log ( N ( H i ) ) = 21.2 \pm 0.5 . This is the first direct indication of a connection between GRB host galaxies and Damped Ly \alpha Absorbers .