A Fijian businessman was holding the prime minister and several cabinet ministers hostage in the national parliament today after overnight negotiations to resolve the conflict failed to end the crisis.
Mr George Speight and about seven armed men stormed parliament early yesterday and seized the South Pacific country's first ethnic Indian prime minister, Mr Mahendra Chaudhry, and his ministers.
Mr Speight said he was acting on behalf of indigenous Fijians, who make up a little more than half of the 800,000 population.
"The former government and their policies are at the very heart of the discontent of indigenous people in Fiji," Mr Speight told Fiji Radio from behind parliament's locked doors on Saturday.
"I wish to assure the public of Fiji and international community at large of the safety of the former government. We are looking after their safety and well-being."
Fiji's former prime minister Mr Sitiveni Rabuka and several overseas governments have called on Mr Speight to surrender, saying he does not have the backing of Fiji's police and military who remain loyal to the government.
Mr Rabuka, leader of a military coup in Fiji in 1987 which toppled an Indian-dominated government, has been acting as a mediator between Mr Speight and Fijian President Ratu Sir Kamisese Mara since yesterday afternoon.
But it remained unclear how much backing Mr Speight has in Fiji.
The crisis triggered a spate of looting in the capital Suva and led to the president declaring a state of emergency and dusk-to-dawn curfew.
Mr Speight said the state of emergency declared by the president was invalid.
He told a Fiji website, www.fijilive.com, that under the constitution the president needed the advice of the cabinet to declare a state of emergency. But the cabinet was "under siege" and could not be consulted.
Two army battalions were deployed overnight to help police maintain law and order in Suva but no attempts were made to end the hostage stand-off in the parliament.
Mr Speight is expected to hold a news conference later today to detail his plans and announce a government.
He has indicated he has the tacit support of the army but said the police and army would remain neutral until civilian authorities sorted out the political crisis.
Racial tension has mounted in Fiji between indigenous Fijians and Indians since Mr Chaudhry - the nation's first ethnic Indian prime minister - won power last May, with several anti-government demonstrations in recent months.
India, Britain, Australia, New Zealand, and the United States have condemned the coup attempt and said they hoped constitutional rule could be upheld.
"The government of the United States condemns in the strongest terms the illegal armed takeover of the Fiji parliament building," the State Department said in a statement issued in Washington.
"We urge the gunmen inside who are holding the democratically elected leaders of Fiji hostage to release them unharmed immediately," it said.
"The consequences of any unconstitutional seizure of power on US-Fiji relations would be very substantial, and very detrimental to Fiji's standing in the international community."
Mr Speight countered: "I would urge that reprisals against indigenous people of this country are not in their interests."
The Commonwealth secretary-general, Mr Don McKinnon, has indicated that Fiji, a former British colony and member of the 54-nation Commonwealth, could be suspended from the international body unless democratic government is restored.