Mutinous soldiers stormed a military camp near Madagascar's main airport on Sunday and the army said it had surrounded the barracks and was holding negotiations with the rebels.
The island nation has been rocked by political turmoil and violence in the three years since then-opposition leader Andry Rajoelina ousted president Marc Ravalomanana, who has been in self-imposed exile in South Africa since his overthrow.
"At 5 a.m. a group of armed soldiers forced their way into the barracks of the 1st RFI (First Regiment of Interventionist Forces) Ivato. The group fired in the air, blocking all attempts to enter into the barracks," an army statement said.
Soldiers and gendarmes were positioned around the camp and an army official said officers had been sent in to negotiate the mutineers' surrender.
"If they do not succeed, this situation will finish in a military assault. Elements of the armed forces are ready for that ... Right now we don't know until when the negotiations will continue," head of the army's communication service, Philibert Ratovonirina, said.
Earlier the army said there was no risk of the incident spreading beyond the base.
The army said Corporal Koto Mainty, former bodyguard of a former defence minister and known as "Black", had led the revolt.
A Reuters cameraman at the scene heard gunshots fired in the air. Onlookers gathered nervously around the camp, a few hundred metres from the airport.
A defence ministry statement said Ivato International airport remained open.
"We are working normally as usual. But it is up to companies to decide on their flights," border police chief John Brunelle Razafitsiandraofa told Reuters.
Britain's Foreign Office said in a travel advisory that the airport had been closed. The U.S. embassy in Madagascar said on its Twitter feed that flights in and out had been suspended.
RIVAL LEADERS DUE TO HOLD TALKS
In September, Madagascar's major parties signed a road map mediated by the Southern African Develpment Community (SADC), which confirmed Rajoelina as president, allowed for the unconditional return of Ravalomanana and paved the way for elections within a year.
Rajoelina led often-violent street protests against Ravalomanana and eventually seized power in March 2009 with the help of dissident army officers in what many aid donors considered a coup, leading them to freeze non-emergency aid.
Ravalomanana was sentenced in absentia to life in prison for the killings of demonstrators by troops in the run-up to his removal. He has tried to return to Madagascar without success.
Rajoelina has said the return of the former leader risked stoking tensions and a senior cabinet minister said in September that Ravalomanana would be arrested on arrival.
The rival leaders are due to meet for reconciliation talks next week in the Seychelles, according to an aide to Ravalomanana.
Armed Forces Minister General Lucien Rakotoarimasy told Reuters the soldiers' motivations were unclear.
"We are trying to bring them back to reason," he said.
Famed for its lemurs and rain forests, Madagascar's tourism industry has been badly hit by the insecurity, and investors eyeing its oil, gold and chrome have also become more wary.
One of the world's poorest countries, Madagascar is also the biggest producer of vanilla.