"The Honduran people have the right to insurrection," said Zelaya, speaking Tuesday in the neighboring Central American country of Guatemala.

Insurrection is a legitimate democratic right "when faced with a usurping government and a coup-supporting military," he added, urging his supporters in Honduras to strike, march and engage in civil disobedience because that is "a necessary process when the democratic order of a country is disrupted.

"I want to tell you to not leave the streets, that is the only space that they have not taken from us," he told a news conference alongside Guatemalan President Alvaro Colom.

Zelaya has issued an ultimatum to the interim government led by Roberto Micheletti that it must relinquish power within the week and demanding his own immediate restitution.

But in the Honduran capital Tegucigalpa, acting foreign minister Carlos Lopez said that authorities were still committed to talks aimed at finding a peaceful resolution with Zelaya on Friday in San Jose, mediated by Costa Rican President Oscar Arias.

"We are not issuing threats," Lopez shot back at Zelaya's call for an insurrection, while also emphasizing that Micheletti's government was in control and the country was at peace.

"We removed the curfew and the government has complete control of the territory."

Leaders of the new Honduran regime, who have not been recognized by the international community, refuse to describe their move as a coup d'etat. Honduras has become increasingly isolated by its neighbors, and the coup was roundly condemned by the United States.

In another setback to Micheletti's government, interim finance minister Gabriela Nunez announced an 8.2 percent reduction in the 2009 budget over the previous year and a 10 percent reduction in the central government's current spending.

Nunez proposed austerity measures for the government, including reductions in "all unnecessary spending" and vehicle, travel, fuel and advertising expenditures.

Two days of talks mediated last week by Arias -- who won the 1987 Nobel Peace Prize for helping resolve civil wars in Central America -- ended without any resolution to the stalemate, as the coup leaders insisted they would remain in power.

In San Jose, Arias again urged the parties to be patient.

"Of course, I understand President Zelaya's desire... to return (to power in Honduras) as soon as possible, but experience tells me that he should be a little patient," Arias told reporters.

"If not through dialogue, how else are we going to restore power to President Zelaya?"

Micheletti softened his position Tuesday, this time not excluding a meeting with Zelaya.

"He is a former president of the country, an old friend of mine, and I will very gladly hold out my hand to him when the time comes, if he wishes to do so," Micheletti said.

In a gesture directed at the United States, Micheletti accepted the second resignation of his former foreign minister, Enrique Ortez, who had stepped down from that post after having outraged Washington by calling President Barack Obama a "little black man."

Ortez, who had been nominated interior minister, said he withdrew his name in order to "avoid detracting" his "friend," Micheletti.

The head of the Honduran army, General Romeo Vasquez, told AFP that Zelaya was exiled to avoid "deaths and injuries."

Honduran security services "believed it would be dangerous to imprison him," Vasquez said, adding such a move "could have caused deaths and injuries" if his supporters had tried to free him.

"The consequences for the country would have been serious," he said.

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