Fiji's military commander has seized control of the country, marking the fourth coup in two decades.
The army chief and PM have been at loggerheads for months
Commodore Frank Bainimarama said in a televised address he had assumed executive powers and dismissed Prime Minister Laisenia Qarase.
Cmdr Bainimarama accused the prime minister of corruption and leading Fiji on a path of doom.
Mr Qarase, who said he would now retire from politics, accused the military of bringing "shame to the country".
He said Cmdr Bainimarama was feeding the country lies about his government.
"What the military has done is raped our constitution," Mr Qarase said.
"They have brought shame to the country... and all right-thinking people should stand up and fight for our democracy - by peaceful means of course," he said.
"Fiji has now become a laughing stock in the international arena."
Fiji's largest daily newspaper, the Fiji Times, says it has suspended publication after refusing to accept censorship.
Cmdr Bainimarama had repeatedly threatened to unseat Mr Qarase, expressing anger at the prime minister's proposed legislation to offer an amnesty to those responsible for a 2000 coup which Cmdr Bainimarama helped put down.
FIJI TENSIONS TIMELINE
2000: Brief coup put down by army chief Bainimarama
July 2005: Bainimarama warns he will topple government if it pardons jailed coup plotters
May 2006: PM Laisenia Qarase wins re-election
31 Oct: Qarase tries - and fails - to replace Bainimarama
November: Qarase says he will change law offering clemency to coup plotters - Bainimarama warns of coup
5 Dec: Military declares coup
Cmdr Bainimarama warned that more troops would be seen on the streets but said there was no curfew and he urged the population not to be intimidated.
He said Fiji had reached a "crossroads" and that the government had been "unable to make decisions to save our people from destruction".
"I urge all citizens to remain calm, and maintain the peace that currently prevails," he said.
Cmdr Bainimarama named a doctor, Jona Senilagakali, as caretaker prime minister and said he would next week ask the Great Council of Chiefs to restore executive powers to President Ratu Josefa Iloilo.
The president would then appoint an interim government and elections would follow at an unspecified date, the military chief said.
Cmdr Bainimarama said the prime minister had created tension in the army by trying to have him removed.
Acting commissioner of the largely unarmed police force, Moses Driver, condemned the takeover.
"The military has now indulged in a very serious criminal act and... we are not going to support the military," he said.
New Zealand Prime Minister Helen Clark also condemned Mr Bainimarama, saying he had "taken leave of his senses and the power has certainly gone to his head".
Britain said it had suspended military assistance to Fiji and was "considering further measures with our international and Commonwealth partners".
Fiji has a population of only 900,000 but is a major tourist destination and attracts up to 400,000 visitors a year.
It has also witnessed considerable political tension over the past 20 years between ethnic Fijians, who make up about 50% of the population and ethnic Indians at around 44%.
The military takeover will add to the concerns of Australia and New Zealand about political instability in the wider Pacific islands region.
Australia, Britain and New Zealand had advised their citizens to stay away and warned of dire social, economic and diplomatic consequences if the military completed its coup.
Australian Prime Minister John Howard earlier said he had turned down a request from Mr Qarase to send troops to prevent a coup.
"The possibility of Australia and Fijian troops firing on each other in the streets of Suva was not a prospect that I for a moment thought desirable," Mr Howard said.