Fiji's defiant military chief gave Prime Minister Laisenia Qarase a 24-hour ultimatum on Thursday to clean up his government or face removal despite winning a raft of concessions.
Suva residents were stockpiling supplies from supermarkets and cash machines were running short of money despite attempts by Qarase allay fears in a national address.
Military Commander Frank Bainimarama stoked those fears anew when he said crisis talks in New Zealand on Wednesday had been a failure and gave Qarase 24 hours to meet all his demands or he would start his threatened "clean-up campaign".
"I give him until tomorrow afternoon to comply with our demands or I will start the clean-up campaign," Bainimarama told reporters in his military headquarters.
"I stress it will be a peaceful clean-up campaign," said Bainimarama, whose troops staged a three-hour show of force by securing parts of the capital overnight Wednesday.
Bainimarama has repeatedly threatened to remove Qarase's government unless it drops three pieces of legislation, including a bill that would grant amnesty to those involved in a 2000 coup.
Not long before Bainimarama's ultimatum Qarase said he had suspended the three bills pending a constitutional review, after which he could withdraw them completely.
Bainimarama gave Qarase a list of "non-negotiable demands" and a two-week deadline last week, at the same time threatening a "clean-up" of Qarase's elected government.
His demands included the resignation or removal of Fiji Police Commissioner Andrew Hughes and the dropping of police investigations into whether his threats were seditious.
Qarase also appeared to give in to those demands when he said he would accept any advice police and prosecutors give him.
"If they decided not to proceed further in the greater interest of peace and stability in Fiji, the government would agree to this," Qarase said.
Hughes went straight home to Australia on leave after Wednesday's New Zealand-brokered talks.
In return for his concessions, Qarase had asked for a commitment that the military would not act outside the law.
"This would go a long way towards calming fear and ending uncertainty among the people and restoring confidence in the economy," Qarase said.
But his concessions were not enough for Bainimarama, who still wants Qarase to remove a list of senior government and public service figures he says were connected to the 2000 coup.
Bainimarama's forces also remain deeply suspicious of foreign intervention.
Pacific Island Forum foreign ministers will meet in Sydney on Friday to discuss Fiji's crisis under the same regional pact that enabled Australia to lead a mission into the Solomon Islands.
Bainimarama has warned them to back off.
New Zealand Prime Minister Helen Clark says the government is extremely disappointed in the latest developments.
Through a spokesman, Clark says there is no doubt the Fiji Prime Minister and government were willing to move forward. She says it is a time for cool heads.
And Clark says it is not too late for the commodore to change his mind.
The Prime Minister says Fiji's leaders need to make it clear to the military commander that if he acts, he acts alone.
Meanwhile, an Australian army Black Hawk helicopter crashed into the sea south of Fiji late on Wednesday, killing one Australian soldier and stoking the Fiji military's fears of foreign intervention.
The helicopter was from one of three warships Australia sent towards Fiji this month in case it needed to evacuate holidaying nationals, a decision that incensed Bainimarama and his troops.
Fiji has suffered three coups since 1987. Bainimarama was almost killed in a failed but bloody mutiny linked to the 2000 coup and blames Qarase for being soft on those behind those upheavals.
Australia, Britain and New Zealand have advised their nationals against travelling to Fiji and the UN Security Council has also expressed its concern.
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