Chadian President Idriss Deby will have European Union troops in his country. There have been continuing clashes with rebels and border skirmishes with Sudan.
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Chadian forces have used tanks and helicopter gunships to try to drive back rebels besieging the presidential palace in the capital N'Djamena.
Aid agency MSF told the BBC there were "a lot of dead bodies" in the city, and 300 people being treated in hospitals.
The rebels, who want to overthrow President Idriss Deby, seized large parts of the city on Saturday.
Correspondents say the crisis could have major implications for efforts to end the conflict in Darfur.
Witnesses heard anti-tank and automatic weapons fire coming from the city centre, starting at about 0500 local time (0400 GMT) on Sunday.
French Defence Minister Herve Morin said President Deby, who is believed to be inside the palace, still had 2,000 to 3,000 men under his authority, despite rebel claims that government troops were defecting.
A spokesman for the rebels said they had also taken the eastern town of Adre, near the border with Sudan, an area where some 400,000 people displaced as a result of the conflict in Darfur are living in camps.
But the government said it had beaten back that attack, and claimed the assault had been backed by Sudanese aircraft.
Sudan has denied it is involved in any of the fighting in Chad.
Correspondents say Sudan is known to have supported rebels in Chad in the past - while Chad has backed rebels in the Sudanese province of Darfur.
Adre is in the area where a French-dominated EU peacekeeping force is due to deploy to protect displaced civilians and the aid workers supporting them.
Chadian officials have accused the rebels of seeking to stop the deployment of the EU force.
In other developments:
More than 500 French and other foreign citizens have been evacuated to the Gabonese capital, Libreville, with another 400 gathered in designated area in N'Djamena, awaiting airlift.
President Deby refused a French offer to evacuate him, French officials told AFP.
The French military said several of its combat planes had been moved out of N'Djamena for safety, although they had earlier been seen overflying the area.
France has a long-term military presence in Chad, one of its former colonies, giving the government intelligence and logistic support.
Mr Deby seized power in a coup in 1990, but has won three elections since then, although their legitimacy has been challenged.
The BBC's Stephanie Hancock, recently based in Chad, says the tide began to turn against him after his decision in 2005 to change the constitution to allow him to run for a third term in office.
Tensions with Sudan have also been heightened over the conflict in Darfur.
Sudan's government and pro-government Arab militias are accused of war crimes against the region's black African population.
Some 2m people have fled their homes, including an estimated 200,000 who have sought safety in Chad - many living in camps along the border with Sudan.
Aid agencies fear the fighting could disrupt $300m aid operation supporting millions in Chad.
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Story from BBC NEWS:
Published: 2008/02/03 17:42:21 GMT
Chad rebellion quashed, Sudan behind it: Minister
4 Feb 2008, 0659 hrs IST,AFP
NDJAMENA--The Chadian government has said it had quashed a rebellion aimed at ousting President Idriss Deby and driven the rebels out of the capital Ndjamena.
"The battle for Ndjamena is over," Foreign Minister Amad Allam-Mi told France's RTI radio in the Ethiopian capital Addis Ababa in an interview in which he angrily accused the Sudanese of being directly behind the rebellion.
A leading rebel said on condition of anonymity that the insurgents had simply withdrawn temporarily to allow civilians time to leave the capital.
"People should not think that Deby has won. He is still entrenched in his bunker from which he cannot leave," he said on condition of anonymity.
The capital, which was calm late Sunday, had earlier been rocked by tank battles in the streets and helicopter air strikes.
Anti-tank and automatic weapons fire was heard around the presidential palace, where Deby has been holed up since Friday.
Bodies covered with flies littered the streets and aid groups reported hundreds of wounded from the fighting.
Allam-Mi said Sudan had masterminded the rebel offensive in a bid to install its own Sudan-friendly administration in Ndjamena and "to close the window on the crisis in Darfur."
He also threatened future incursions into Sudan to pursue the rebels.
Fighting Rages in Chadian Capital
And in Area Near Darfur Housing 420,000 Refugees
By MICHELLE FAUL
The Associated Press
Tanks rolled through Chad's capital on Sunday, turning the streets into a battle zone between the government and rebels littered with bodies. Fighting also raged in an area where some 420,000 refugees live near the border with Darfur.
Chad and its former colonizer, France, accused Sudan of masterminding the coup attempt in the oil-rich Central African nation. Sudan has repeatedly denied any involvement in the fighting.
Hundreds of rebels penetrated the capital of Chad on Saturday. The violence has endangered a $300 million global aid operation supporting millions of people in Chad, a country about three times the size of California. It also has delayed the deployment of a European Union peacekeeping mission to both Chad and neighboring Central African Republic.
France accused Sudan of wanting to crush President Idriss Deby's regime ahead of the arrival of the EU force, which is to operate along the volatile border with Darfur.
The force was to be based in the area of the key eastern town of Adre, which rebels said they seized on Sunday. The government said it had repelled the attack. Adre, near the border with Darfur, is a humanitarian hub surrounded by camps with some 420,000 refugees from Darfur and Chadians displaced in the spillover from the violence.
Chadian Gen. Mahamat Ali Abdallah Nassour alleged that Sudanese troops were involved and called it a "declaration of war" from Sudan.
"Sudan does not want this force because it would open a window on the genocide in Darfur," Chad's Foreign Minister Amad Allam-Mi said on Radio France Internationale.
In a statement Sunday, Sudan's Foreign Ministry spokesman Ali al-Sadeq said "we would like to stress that Sudan does not provide any assistance to any side" in Chad.
"Any developments in Chad reflect on Sudan and any instability there would have a negative impact on Sudan," he said.
The U.S. Embassy in N'Djamena said Sunday it was temporarily closing and relocating all of its operations and remaining staff to the airport. It had authorized the departure of its nonessential staff. The United Nations also said it was temporarily evacuating its staff.
French soldiers in N'Djamena began evacuating foreigners on Saturday night, and nearly 400 had left by midday Sunday, said a French military spokesman, Capt. Christophe Prazuck.
One foreign aid worker described the scene in N'Djamena on Sunday as "bloody and chaotic" with bodies littering the streets and looters breaking into shops during lulls in the fighting. Gunfire could be heard coming from the area around the presidential palace, said the aid worker, who spoke on the condition of anonymity because he was not authorized to talk with reporters.
The death toll from the fighting was not known. But the French organization Medecins sans Frontieres reported they had operated on about 50 wounded people only one a combatant since Saturday at a hospital in the capital. A spokesman in Paris said the Chadian Red Cross had told MSF doctors that they had counted about 200 wounded. The civilians had been hit by stray bullets, MSF said.
Hundreds of people are fleeing the fighting, crossing the Chari River to Kousseri, in neighboring Cameroon. Helene Caux with the U.N. refugee agency said at least 400 had crossed and "people are still coming." She said her agency needed to confirm the refugees were civilians with no fighters among them.
The rebels arrived Friday on the capital's outskirts in about 250 pickup trucks mounted with machine guns after a three-day push across the desert from Chad's eastern border with Sudan. The entered the city early Saturday, quickly spreading through the streets.
The fighting resumed around dawn Sunday, a French military spokesman said, and government forces were using tanks and helicopter gunships to try to repel the rebels, who were battling back with assault weapons, rocket-propelled grenades and machine guns.
Several international workers in the Darfur town of el-Geneina in Sudan confirmed that Chadian rebels had left their nearby bases in recent days and were reported to have crossed into Chad. They spoke on condition of anonymity because of the sensitivity of the issue.
French and U.S. statements condemning the coup attempt have referred to the rebels coming from outside the country.
Rebel spokesman Abderaman Koulamallah claimed Deby was trapped at his presidential palace, surrounded by tanks and armored vehicles, and that they controlled the rest of the city after two days of fierce fighting.
"Nobody can say who will win," said Prazuck, the French military spokesman.
France offered to whisk Deby out of Chad, Defense Minister Herve Morin said Sunday. Deby apparently refused to flee.
Chad has been convulsed by civil wars and invasions since independence from France in 1960. The recent discovery of oil has only increased the intensity of the power struggles in the largely desert country, and another Chadian rebel group launched a failed assault on N'Djamena in 2006.
The rebels currently fighting in the city are a coalition of three groups. The biggest is led by Mahamat Nouri, a former diplomat who defected 16 months ago. They others are led Timan Erdimi, a nephew of Deby who was his chief of staff and the third is a breakaway from Nouri's group headed by Adelwahid Aboud. They have long been fighting to overthrow Deby, whom they accuse of corruption.
The rebels are also angry with the president for not providing what they consider enough support to insurgents in Sudan's Darfur region, some of whom are from Deby's own tribe, the Zaghawa, who are found in both Chad and Sudan.
Deby, who came to power at the head of a rebellion in 1990, has won elections since, but none deemed free or fair. He brought a semblance of peace after three decades of civil war and an invasion by Libya, but became increasingly isolated.
The most recent rebellions in Chad began in 2005 in the east, erupting at the same time as Darfur conflict in Sudan. More than 200,000 people have died in five years of fighting between ethnic African tribes and Sudanese government forces and 2.5 million have been driven from their homes.
Associated Press writers Angela Doland in Paris, Alexander G. Higgins in Geneva, Alfred de Montesquiou in Khartoum, Sudan and Matthew Rosenberg in Nairobi contributed to this report.