"Either the coup is reversed or generalized violence is coming," Zelaya warned the interim government headed by Roberto Micheletti in an interview Friday with Nicaragua's state-owned Channel 4 TV.

"The people have the right to protest, to insurrection. This is the case of the Honduran people, which is being brutally repressed," he said.

Soon after, around 100 Honduran men belonging to Zelaya's "popular army" began training exercises in a camp on the Nicaraguan side of the border with Honduras, a journalist witnessed.

The recruits, mostly young men and all unarmed, exercised, marched, and carried out maneuvers under the direction of leaders who said they were Honduran army veterans.

According to the leaders, other similar camps had been set up along the border.

Zelaya announced Wednesday that - with permission from leftist Nicaraguan President Daniel Ortega - he would organize his own army based on the more than 300 Honduran supporters that gathered at his base at the border town of Ocotal, 226km north of the Nicaraguan capital Managua.

This will be "the popular militia that will guard the president upon his return," Zelaya said.

Ortega, speaking Friday in Managua at an even marking the 30th anniversary of the birth of Nicaragua's air force, warned that his forces were prepared if anyone - like the Honduran regime - was thinking of attacking.

"If you want peace, prepare for war," Ortega said. "Precisely to avoid war we have to prepare for whoever thinks they can come take a stroll in Nicaragua."

Ortega said that "it made no sense to launch any aggression against Nicaragua" because it has a well trained army ready to defend the country.

He also called on the Honduran military to "not be carried away" by the policies of the civilians that ousted Zelaya, and urged them to help find a solution to the crisis.

In Tegucigalpa, Micheletti on Friday insisted that "under no circumstances" would Zelaya return to office, sinking what little hopes remained that a Costa Rican-brokered peace plan can end the deadlock.

Zelaya, who was elected as a moderate conservative and took a sharp turn to the left while in office, was overthrown in a military-backed coup on June 28 and bundled out of the country.

Under the plan Zelaya would complete his term as president in a national unity government, but would be forced to leave power within months, as scheduled.

The conflict has increasingly become an ideological battle between the Central American country's small socially conservative, business-oriented community and the more numerous poor, from whom Zelaya draws much of his support.

Meanwhile some 3,000 Zelaya supporters marched and prayed in support of a protester who received a bullet wound on Thursday.

Zelaya's wife Xiomara Castro - who returned to the capital after police for days prevented her from meeting her husband at the border with Nicaragua - joined the protest.

And a Honduran court issued arrest warrants for Zelaya on charges of falsifying public documents, fraud and abuse of power. Zelaya already faces a string of charges that include treason.

In Washington, the Organization of American States (OAS) put off without explanation a planned Friday meeting on the Honduran crisis until next week.

The OAS suspended Honduras on July 5 following the coup, and OAS Secretary General Jose Miguel Insulza warned that his group could take additional measures against the Micheletti regime.

The United States this week canceled diplomatic visas for four members of the interim government, and Micheletti on Friday threatened to retaliate by canceling visas of U.S. diplomats.