Army mutineers have seized a prestigious shopping and hotel complex in the Philippines capital, ringing it with what appear to be explosives.
Loyal marines have taken positions around the complex
A retired military officer is negotiating with the rebels who are said to be protesting at corruption within the government. There has been no firing at the scene.
Residents of an apartment block skyscraper inside the Glorietta complex - which include the Australian ambassador and other foreign nationals - have been told to evacuate after earlier being trapped by the incident.
Rebels claimed they had only been kept inside until daylight for their own safety.
President Gloria Arroyo on Saturday ordered the arrest of a number of "rogue" junior officers who had abandoned their posts earlier in the day.
Security guards are said to have fled from the scene when the renegade soldiers appeared but marines loyal to the government are now surrounding the rebel positions.
Australian counter-terrorist police are meeting in Canberra to discuss the situation but Federal Police Commissioner Mick Keelty said though Australia was ready to help if required he believed there was as yet "no real cause for alarm".
Correspondents at the scene say the rebel soldiers fit the description of the group of soldiers accused of plotting against President Arroyo.
One of the officers on the government's arrest order told reporters outside the complex that the soldiers had planted explosives as a defence and denied any coup plot.
"We are not attempting to grab power - we
are just trying to express our grievances," Lieutenant Antonio Trillanes
The rebels say they are only defending themselves
"These explosives are set to defend our position. If they try to take us down, we will be forced to use them."
He said the government had put out a "death warrant" against himself and the others to "suppress what we know".
The group has apparently demanded the resignation of Ms Arroyo and her defence minister. It accuses the government of staging terrorist attacks in the Philippines as a means of getting military aid from the US.
The BBC's Jonathan Head in Manila says such allegations have been aired before, but the rebel soldiers have provided no proof for their claims.
The limited number of soldiers involved - only 200 at the highest estimate - means that the rebels are more of a nuisance than a threat to the government, he notes.
But our correspondent adds that the incident reinforces the perception that the government is not in a secure position.
Red armbands displayed by the renegades feature a sun-symbol flag used in the resistance against Spanish colonial rule.
Armed with rifles, they arrived wearing baseball caps and black backpacks.
President Arroyo said the rebels would be court-martialled
A military spokesman, Lieutenant Colonel Daniel Lucero, has called on the rebel soldiers to surrender.
"This is not the right way to express our sentiments,"
"In this kind of adventurism, only the enlisted
personnel will suffer."
President Arroyo went on national TV on Saturday evening after an emergency cabinet meeting to order the arrest of a "small band of rogue
junior officers and soldiers".
They had, she said, "deserted their post and illegally brought weapons with them".
The military Chief of Staff, General Narciso Abaya, identified at least 10 officers from the army and navy, of whom eight are decorated veterans of the fight against Muslim rebels in the southern islands.
A predecessor of President Arroyo, Corazon Aquino, fended off several coup attempts in the late 1980s by officers complaining about corruption.