The French government issued a statement denouncing the violence.
France "strongly condemns the attempt to seize power" in Chad by "armed groups from the outside", the French foreign ministry said on Saturday.
It called for "peace and reconciliation" and expressed support for mediation launched earlier during the day by the African Union (AU).
Paris also said that its role in the conflict is "neutral".
Herve Morin, the French defence minister, said on Saturday that France had a "neutral" position in the current conflict in Chad between government and rebel troops.
"We continue to remain neutral in this combat," Morin told France 3 television.
Morin added that France had sent over a plane to help evacuate any foreign citizens who wished to leave Chad.
He said that around 200 people had said they wanted to leave.
Battle in capital
Government forces battled the opposition near the presidential palace and seemed to be moving through the city freely.
President Idriss Deby seized power in a Libyan-backed coup in 1990
He went on to win the Chad's first two
multi-party elections in 1996 and 2001
A ceasefire signed between Deby and four rebel groups in October recently collapsed
The largest rebel group, the Union of Forces for Democracy and Development, is led by a former minister who accuses Deby of corruption
The whereabouts of Idriss Deby, the president the rebels seek to overthrow, was not known.
State television services have been suspended.
State radio services have also gone off the air, according to Ibni Oumar Mahamat Saleh, an opposition alliance leader.
Mutasa said that French troops were stationed outside hotels housing French nationals, as well as the French embassy. At least 1,500 French people live in Chad.
"The [Chadian] civilians are looking out for themselves. Some Chadian forces are in town, but most of them have been sent out where the fighting has happened," she said.
Mutasa said local residents were terrified and few had any idea what would happen next.
Chadian government troops are guarding the presidential palace, the defence ministry and the official radio station building.
An opposition leader said that they were ready to provide Deby safe exit if he was holed up inside the presidential building.
"We suppose that Deby is inside. If he wants to leave we have no problem," Abakar Tollimi told AFP by satellite telephone.
"We control the situation, we control the city, there are some pockets of resistance," he said.
African leaders also condemned the opposition alliance's march on Ndjamena at an AU summit in Addis Ababa, Ethiopia.
"The assembly strongly condemns the attacks perpetrated by armed groups against the Chadian government and demands that an immediate end be put to these attacks and resulting bloodshed," the declaration said.
Jakaya Kikwete, Tanzania's president and new head of the 52-nation bloc, said the AU will not recognise Chadian rebels should they seize power,
"If the rebellion succeeds, certainly we will excommunicate them from the African Union until normalcy and democratic institutions are restored in that country, if it has to happen that way at all," Kikwete told a news conference.
He said the AU had nominated Muammar Gadhafi, the Libyan leader and Denis Sassou-Nguesso, the president of Republic of Congo, to try to broker peace there.
Ban Ki-moon, UN secretary-general, has also expressed concern at the security situation.
A UN statement said Ban was "deeply concerned at the resumption of fighting in Chad ... and reiterates the United Nations' condemnation of the use of military means to seize power".
Jebren Issa, a spokesman for the opposition United Forces for Democracy and Development, confirmed that the presidential palace has been surrounded.
|The opposition alliance wants to remove|
Deby, Chad's president [AFP]
"Deby will surrender to our troops. We will bring him to justice and can guarantee his safety and security," he told Al Jazeera.
He said the rebels had no intention of attacking French troops.
Responding to AU criticism of the rebel offensive, Issa said whatever that was happening was an internal matter for Chad.
"We had no choice but to throw him [Deby] out of power."
The United Nations evacuated all "non-essential" staff from Ndjamena to Cameroon amid the fighting.
Amid the increasing tensions, France has sent a combat unit of 126 extra troops into Chad, joining 1,100 already situated there.
A EU peacekeeping mission, which was due to start deploying in Chad and neighbouring Central African Republic, announced on Friday that it was temporarily suspending troop flights to Chad.
Eufor, which at full strength will consist of 3,700 peacekeepers, is tasked with protecting about half a million civilians displaced as a result of the crisis in Sudan's Darfur region.