Andry Rajoelina had proclaimed himself in charge of national affairs
Hundreds of opposition supporters have gathered in Madagascar's capital, Antananarivo, to protest against the dismissal of the city's mayor.
Andry Rajoelina, who has been leading protests against the president, was sacked by the government on Tuesday.
His supporters have blocked roads to the municipal offices to prevent the new mayor from coming to work.
Mr Rajoelina says he will set up a transitional administration unless President Marc Ravalomanana steps down.
Dozens of people have died in protests in the last week amid the bitter power struggle between the two men.
Mr Rajoelina's replacement as mayor has been named as Guy Randrianarisoa, a local city official.
The sacked mayor accuses the president - a 59-year-old self-made millionaire who won re-election in 2006 - of misspending public money and being a dictator.
The African Union has condemned any moves to overthrow the president and warned the rivals not to resort to unconstitutional methods to settle their dispute.
Analysts say Mr Rajoelina has successfully tapped into widespread frustration with the government, but may have over-played his hand in trying to overthrow the president.
The US ambassador to Madagascar, Niels Marquardt, told the BBC there was little chance of the Indian Ocean island nation receiving any more American aid unless it cleaned up its act.
He said President Ravalomanana was seeking a grant totalling $500m (£345m) starting in 2010.
"There is very little opportunity for that to happen unless some of these issues of political freedom and economic freedom as well begin to be addressed," he said.
The large and beautiful island off the south-eastern coast of Africa has lurched from one crisis to another, putting off investors interested in exploiting its rich mineral reserves, its spices and its potential for tourism, correspondents say.