"The army is in control of institutions placed under its authority, such as the media outlets of Al Mustaqbal Movement," the army said.

"It also controls the area around the government headquarters, the central bank, major roads and the area where Hariri and (Druze leader Walid) Jumblat's residences are located in west Beirut," the statement added.

Hizbullah gunmen have been gradually seizing offices of pro-government factions in predominantly Muslim West Beirut since street battles broke out Wednesday.

Hizbullah gunmen, backed by members of Parliament Speaker Nabih Berri's Amal movement, have been handing control of the offices to the Lebanese army, which appeared to be playing a neutral role in the conflict.

Gunfire and the thump of exploding rocket-propelled grenades echoed across west Beirut, where the fighting was concentrated between Sunni militants loyal to the government and Shiite opposition gunmen.

The unrest has triggered urgent appeals for calm from the international community amid fears that a protracted political feud in multi-confessional Lebanon could plunge the country back to the dark days of the 1975-1990 civil war.

Many residents of west Beirut were fleeing to seek shelter elsewhere as tanks rolled through the streets and hundreds of riot police and troops patrolled the city, but did not get involved in the fighting.

Leaders of Lebanon's ruling coalition have been called to an emergency meeting while Arab nations are pushing for a special session of foreign ministers to tackle the crisis. Some states have begun evacuating residents.

"West Beirut plunges into urban warfare," thundered the French newspaper L'Orient-Le Jour.

Lebanon's already debt-laden economy could also be hard hit, with the enforced shutdown of the country's only international airport and the Beirut port and several major highways blocked by burning tires.

Witnesses and AFP correspondents said several Sunni neighborhoods in west Beirut -- considered bastions of Lebanon's ruling bloc -- had been overrun by Hizbullah and Amal gunmen.

Fierce gunbattles also raged in the mixed Sunni-Shiite-Christian neighborhood of Hamra where opposition gunmen also appeared to be gaining ground, AFP correspondents saw.

"Everyone is running away," said 35-year-old businessman Imad in a west Beirut neighborhood as people rushed to stores that remained open to stock up, while others remained trapped in their homes by the fighting.

Armed men were prowling about or hiding in buildings in the otherwise deserted streets of the capital, but by midday the fighting appeared to have eased.

"It was a hellish night. The armed militants were everywhere shooting all over the place," said Rima, another west Beirut resident.

Hariri, whose father Rafik Hariri was assassinated in 2005, had made a television appeal to try to calm the situation but this was rejected by Hizbullah.

Air traffic was paralyzed for the third straight day with no flights scheduled to land or take off from Beirut international airport, an airport official said, after Hizbullah supporters blocked access with mounds of earth and burning tires.

Nasrallah delivered his defiant speech on Thursday after the government launched a probe into a private telecommunications network run by Hizbullah, which critics say has become a "state within a state."

"The decisions are tantamount to a declaration of war and the start of a war... on behalf of the United States and Israel," Nasrallah charged. "The hand that touches the weapons of the resistance will be cut off."

The United States delivered a blunt warning to Hizbullah to stop its "disruptive activities" while U.N. Security Council members said they were "deeply concerned" over the crisis, a view reflected by other Arab and European leaders.

The crisis will be the focus of talks between President George Bush and Saniora in Egypt next week during the U.S. leader's tour of the Middle East.

Regional powerhouse Saudi Arabia, which backs the Saniora government, called for an urgent meeting of Arab foreign ministers, while Yemen suggested army chief Michel Suleiman be mandated to chair a dialogue to resolve the crisis.

The long-running political standoff, which first erupted in November 2006 when six pro-Syrian ministers quit the cabinet, has left the country without a president since November, when pro-Syrian Emile Lahoud stepped down.

While the rival factions have agreed on Suleiman as a consensus candidate, they disagree on the make-up of the new cabinet and so far 18 sessions of parliament to choose a president have been cancelled.

"For the entire country, it is now a question of life or death," L'Orient-Le Jour said. "Nasrallah offered the government no other alternative than a humiliating retreat or war."(Naharnet-AFP)