The military-backed interim government in Honduras has said it will send to congress and the courts a mediator's proposal for the return of Manuel Zelaya, the ousted president.

"We will transmit this draft agreement to our authorities so that dialogue can continue," said Mauricio Villeda, the interim government's delegate at negotiations in Costa Rica said.

Wednesday's statement was the first sign that the interim government might give in to international pressure to let Zelaya return.

Zelaya was last month ousted in a military coup backed by the judiciary and congress.

Oscar Arias, Costa Rica's president who is mediating in crisis talks between the two sides, said earlier that he had called for Zelaya to be restored by Friday in a new proposal to end the Honduran crisis.

Arias said the proposal was the last plan he would submit as mediator in the conflict and that Zelaya and the coup leaders should turn to the Organisation of American States for a new mediator if they refused to accept the plan.

'Drop charter change'

The 11-point plan also calls on Zelaya to drop efforts to reform the Honduran constitution, an initiative that triggered the June 28 coup that forced him into exile.

Arias said he hoped both sides would sign the plan on Thursday.

Earlier on Wednesday, it had appeared that the talks in Costa Rica between delegations representing Zelaya and the coup leaders had broken down.

The ousted leader had vowed to return to Honduras if no deal was reached by the end of the day but the man who has replaced him, Roberto Micheletti, reiterated warnings that Zelaya would be arrested if he entered Honduras.

Micheletti's government rejected a seven-point Arias proposal last weekend that would have allowed Zelaya's return in a power-sharing government.

Demonstrations

Zelaya was removed from power as he was about to press ahead with a non-binding referendum that critics said was aimed at changing the constitution to enable him to run again for office.

Zelaya said the charter changes were necessary to improve the lives of the poor.

Meanwhile, in the Honduran capital of Tegucigalpa, competing marches led to clashes on Wednesday.

Tens of thousands of Micheletti's supporters, rallying in one of the biggest demonstrations seen yet, were approaching a downtown stadium for a scheduled mass rally when several hundred pro-Zelaya students came down a side street.

Clashes ensued and police fired tear-gas to disperse the crowds.