Gunbattles erupted around the presidential palace in the capital of the Central African Republic after rebels advanced into the city vowing to topple President Francoise Bozize.
An AFP correspondent near the palace in the centre of Bangui reported intense fighting at around 0700 GMT before the gunfire became more sporadic.
It was not immediately known if Bozize, who has not been seen since his return from South Africa on Friday, was inside the palace.
Fighters in the Seleka rebel coalition advanced into Bangui on Saturday, ignoring a call for talks to avoid a "bloodbath", after the collapse of a two-month-old peace deal in the notoriously unstable and deeply poor former French colony.
"Today will be decisive," Colonel Djouma Narkoyo, one of the Seleka military commanders on the ground, told AFP. "We call on our brothers in FACA (the Central African army) to lay down their arms," Narkoyo said.
Eric Massi, a Seleka spokesman based in Paris, said rebel forces had launched an offensive early Sunday.
"Our troops are around the palace. We are facing down the last forces loyal to President Bozize," Massi said.
Bozize, who himself launched a coup in 2003, has not issued any statement about the latest unrest.
Narkoyo had told AFP on Saturday the rebels were ready to meet with regional African leaders on the crisis, but refused to negotiate with Bozize.
And he warned that if Seleka -- a loose alliance of three rebel movements -- captured Bangui, it would set up a new government.
On Saturday, rebels said they had moved past a checkpoint that effectively marks the entrance to the capital, although a Central African military source denied the claim.
But Bangui resident Francis Komgdo, who lives near the checkpoint, told AFP the rebels had arrived in the area, some in vehicles others on motorbikes, occasionally firing in the air.
Paris-based rebel spokesman Eric Massi said Saturday the rebel leadership was urging its forces on the ground to refrain from "looting or score-settling with the local population".
Gunfire and explosions on Saturday saw the streets of Bangui emptied as local people fled to their homes. Virtually the only traffic was military vehicles patrolling the main highways.
The city was plunged into darkness after rebels sabotaged a hydroelectric power plant in Boali, north of the capital, an official with the Enerca electricity company and residents said.
A spokesman for Prime Minister Nicolas Tiangaye on Saturday called on the rebels to accept talks to "avoid a bloodbath".
Tiangaye, an opposition figure, was only appointed as part of the peace deal brokered between the government and the rebels in January, an agreement that broke down last week.
Former colonial power France has called for an emergency meeting of the UN Security Council to discuss the deteriorating situation, said Romain Nadal, a spokesman for the president's office.
France had not issued an evacuation order, but the estimated 1,250 French nationals in the country were advised to stay at home, said Nadal.
There were no immediate plans to send reinforcements to back up the 250 French troops in the country to protect them, he added.
The UN Security Council on Friday voiced strong concern about the rebel advances "and their humanitarian consequences" amid reports of widespread summary executions, rapes, torture and the use of children in conflict.
Seleka first launched its offensive in the north of the country on December 10, accusing Bozize of not abiding by the terms of previous peace agreements.
Facing little resistance from an ill-trained and ill-equipped army, they seized a string of towns, defying UN calls to stop before halting within striking distance of Bangui.
They reached a peace deal with the government in January under which Tiangaye became head of a national unity government that was to carry out reforms before national elections next year.
But that deal collapsed this month after the rebels said their demands, which included the release of people they described as political prisoners, had not been met.
The international community has nervously watched the spike in tensions in the landlocked nation of 4.4 million people where Bozize himself seized power in a 2003 coup.
The country has been plagued by coups and army mutinies since its independence from France in 1960.