But Saniora also appeared to be backing away from the government decisions that triggered the street confrontation, offering a compromise that is unlikely to be accepted by Hezbollah. A similar offer from Sunni majority leader Saad Hariri earlier was rejected.

Hezbollah seized the Sunni neighborhoods of Beirut Thursday after its leader Hassan Nasrallah accused the U.S.-backed government of "declaring war" on his group by its recent decision to consider the group's communications network illegal and remove the airport security chief for alleged ties to the militants.

Saniora said he did not declare war on Hezbollah and the decision on the communications issue would be handed over the army to deal with, a position that the opposition had already rejected.

"The decisions have not been (officially) issued and will be referred to the army command," he said.

Saniora also said Lebanon can no longer tolerate Hezbollah keeping freely its weapons — signalling that the U.S.-backed government was toughening its stand against the Shiite militant opposition group despite the government coalition's loss of ground in street fighting in Beirut in the past few days.

Saniora's harsh criticism of Hezbollah, his first since the fighting began, was bound to further escalate the fierce power struggle between the government and Syrian- and Iranian-backed opposition.

Addressing the army, he said: "I call on it once again to impose security on all, in all areas, deter the gunmen and immediately remove them from the street ... to restore normal life."

Although he talked tough, his embattled government appears unable to move against Hezbollah or force the army to act. The army has stayed out of the fighting and has deployed troops in the last 24 hours in some areas to protect besieged leaders of the pro-government factions. But it has not intervened with the Shiite fighters who seized large areas of Muslim west Beirut from pro-government Sunnis.

Saniora has been holed up at his government headquarters protected by Lebanese troops after Hezbollah and its allies swept through the Muslim sector of the capital after sectarian clashes that have killed 25 people.

"We can no longer accept that Hezbollah and its weapons be kept like this. The Lebanese can no longer continue to accept this situation," he said in a nationally televised addressed.

But he said government was not planning on forcefully attempting to disarm the group which has fought Israel in the 2006 war and possesses a huge arsenal of rockets and guns along with thousands of fighters.

He said the fate of the weapons would have to be decided through state institutions and dialogue.

The dream of democracy in Lebanon has been dealt "a poisonous stab the armed coup carried out by Hezbollah and its allies," he said, saying Beirut was an "occupied, besieged" city by Hezbollah and its allies.

"Hezbollah must realize that the force of arms will not intimidate us or make us retreat from our position," he said.