Peruvian forces are in position around a police station which has been seized by renegade army reservists in a remote town in the southern Andes.
Humala's group looks to Peru's Inca past for inspiration
The BBC's Elliott Gotkine says an operation to re-take the station in the town of Andahuaylas was halted at a request by the human rights ombudsman.
Rebel leader Antauro Humala has told a radio station he will lay down arms at 0730 local time (1230GMT) on Tuesday.
The group has been calling for Peru's President Alejandro Toledo to quit.
A curfew has been declared in and around the town of Andahuaylas, which lies around 900km southeast of Lima.
Four police officers were killed and 19 wounded when former army major Antauro Humala and up to 200 armed followers seized the station on Saturday.
Ten policemen are still being held hostage.
Maj Humala earlier agreed to lay down arms in return for a guarantee of safety for his men but he later retracted his offer, accusing the government forces of firing at them.
Dead and wounded
The Peruvian authorities' operation to re-take the station began on Monday afternoon.
Live TV pictures showed heavily armed police and troops in small groups hugging walls as they moved through the town while gunfire crackled in the background.
Maj Humala claimed that one of his men was killed by a sniper.
President Alejandro Toledo's popularity has been falling in Peru
Photographs taken inside the rebels' positions showed one man lying covered in blood, surrounded by rebel soldiers, and a second man being led away with a head wound.
But within hours of the offensive being launched, Peruvian security forces reportedly put it on hold.
It was apparently suspended at the request of Peru's human rights ombudsman, whose representative, along with a Catholic priest, had been negotiating with the rebel leaders for much of the afternoon.
Maj Humala later told a Peruvian radio station that he had agreed, in principle, to hand over his weapons.
The rebels are former members of the military or national police, who include veterans of conflicts with Ecuador and Peru's own leftist rebels.
Our correspondent reports that the rebels accuse the unpopular leader of corruption and of selling out to business interests in Chile, which is Peru's historic rival.
But the group's broader aim, he adds, is to establish a nationalist indigenous movement modelled on the ancient Inca Empire.