Six weeks of political dispute have paralysed the country
The US ambassador to Madagascar has warned the country is heading for civil war after pro-opposition soldiers forced the army chief to resign.
Niels Marquardt said he was concerned and saddened by the Indian Ocean island's six-week political crisis.
Senegalese President Abdoulaye Wade has now offered to host peace talks.
Army chief Edmond Rasolofomahandry had on Tuesday given the country's political rivals 72 hours to end a dispute which has paralysed Madagascar.
But dissident soldiers took over the army HQ and forced him to resign.
"I note with a great deal of concern and a great deal of sadness that Madagascar is - nearly - on the verge of civil war," said Mr Marquardt.
President Marc Ravalomanana has been involved in a power struggle with opposition leader Andry Rajoelina since mid-January.
At least 100 people have died during opposition protests.
Plans for mediators from a church council to start negotiations on Thursday between the rivals were cancelled.
Mr Rajoelina had earlier said he would boycott the discussions. His spokesman added that the church leaders lacked credibility and the time was not right for talks.
A statement from Senegal's presidency said Mr Wade had asked Mr Ravalomanana and Mr Rajoelina to come to Dakar after receiving requests from both sides to mediate.
The Senegalese leader stepped in during a previous political crisis in 2002, from which Mr Ravalomanana emerged as president.
Andre Andriarijaona has now been sworn in as the new army chief, and he indicated his predecessor had been removed to preserve the cohesion of the army.
"Negotiations with the general were completed in the fraternity worthy of the army. Now all the corps in Madagascar are behind me, and our cohesion has not been affected," he said.
24 January: Opposition protests begin
26 January: Two protesters shot dead
27 January: At least 20 bodies found in burnt shop
31 January: Rajoelina says he is in charge of the country
3 February: Rajoelina sacked as the capital's mayor
7 February: Security forces shoot dead at least 20 protesters
8 March: Section of the army joins opposition
9 March: Rajoelina under UN protection
10 March: Defence minster ousted
11 March: Army chief of staff forced out
The AFP news agency reports that only the president would normally appoint an army chief of staff.
On Tuesday, dissident soldiers also forced the defence minister to resign.
President Ravalomanana on Tuesday gave a rare national address, in which he admitted to making mistakes and called for an end to violence after two days of looting in the capital Antananarivo.
The whereabouts of Mr Rajoelina are unclear after a French foreign ministry spokesman said he had left the French embassy in the capital, Antananarivo.
Frederic Desagneaux told AFP that Mr Rajoelina was no longer in the French embassy.
He refused to give further details, directing inquiries to the United Nations.
The UN had said it would offer protection to the opposition leader.
Earlier, hundreds of government supporters had gathered outside the French embassy, demanding that the opposition leader be handed over.
Mr Rajoelina, a 34-year-old former DJ and Antananarivo mayor, went into hiding last week after the security forces tried to arrest him.