The Comoros military on Saturday started an operation to disperse armed rebels who took control of Mutsamudu's old city centre on the island of Anjouan earlier this week, a government minister said.
Security forces and rebels opposed to President Azali Assoumani have fought in the narrow streets of the medina quarter in Mutsamudu since Monday, with at least three people killed.
Tensions in the coup-prone Indian Ocean archipelago have mounted in recent months as Assoumani bids to extend term limits through constitutional changes that could see him rule for 11 more years.
"The army has started to take up positions inside the medina, no shots have been fired. The forces are content to secure the medina so that the population can move freely," Education Minister Mahamoud Salim Hafi, who has led the government response to the uprising, told AFP.
Hafi said some rebels remained holed up in houses, but said no military assault would be needed to clear them out.
"I guarantee that from Monday, life will resume normally in Mutsamudu," he added.
An amnesty deal signed between the main opposition Juwa party and government on Friday appeared to have been rejected by the rebels, who were estimated to be about 40 strong.
Assoumani won a widely-criticised referendum in July allowing him to scrap the rotation of the presidency between Comoros' three main islands, disadvantaging opposition-leaning Anjouan, which was next in line.
Civilians flee
The government had sent in reinforcements to quell the unrest in the old quarter of Mutsamudu after rebels erected barricades and repelled attempts by the security forces to regain control.
Over the last five days, many civilians fled as a curfew was imposed and water and power supplies were cut.
The president, who came to power in a military coup and was elected in 2016, has indicated that he plans to stage polls next year which would allow him to reset his term limits and theoretically rule until 2029.
"(Assoumani) has done nothing in his three years in power, no jobs for young people, nothing. If they don't want to understand our challenges, then we will turn against them," one man in Mutsamudu told AFP.
The Comoros islands -- Anjouan, Grande Comore and Moheli -- are located between Mozambique and Madagascar.
They have endured years of grinding poverty and political turmoil, including about 20 coups or attempted coups, since independence from France in 1975.
The last coups was in 1999 when Assoumani, then the head of the army, seized power for the first time.
He gave up power in 2006 before being elected two years ago.
The fourth Comoros island, Mayotte, remains French.
Assoumani's government accuses the opposition Juwa party of being behind the unrest on Anjouan.
Former president Ahmed Abdallah Sambi who leads Juwa, one of the main opposition parties, is from Anjouan. He has been under house arrest since May.
Earlier this week, Interior Minister Mohamed Daoudou blamed "terrorists, as well as drug addicts and alcoholics" for the rebellion.
The United Nations and African Union have called for restraint from all sides and for stalled talks between rival parties to resume.
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