Several bursts of automatic gunfire were heard as the tense stand-off played out around the Peninsula hotel in the central Makati financial district of the Philippine capital.
At one point minutes earlier clouds tear gas were seen in the hotel lobby.
Hotel guests were evacuated but several journalists remained inside the building, despite warnings from government authorities to leave for their own safety.
"One thing I can assure you is we have more than enough willpower, fighting spirit to bring this government down,'' said Antonio Trillanes, leader of the rebel soldiers who was elected to the Philippine senate in May.
"We want change."
|The rebel soldiers had demanded the |
resignation of President Arroyo [AFP]
Earlier on Thursday Trillanes led a group of rebel soldiers as they stormed out of court in central Manila where they have been on trial over a failed coup attempt in 2003.
The group then demonstrated on the streets with supporters before marching to the Peninsula hotel.
They were joined in the hotel by other dissident officers and leaders from the opposition.
The soldiers on trial were among a group of about 300 who took over a hotel and mall in July 2003 demanding the resignation of the president, Gloria Macapagal Arroyo.
Calling a press conference shortly after seizing the hotel, one of the soldiers on trial, Brigadier Danilo Lim, a former commander of the elite Scout Rangers unit, said the group was taking control of the government.
"We make this fateful step of removing Mrs Macapagal Arroyo from the presidency and undertake the formation of a new government," he said.
Arroyo has faced growing opposition to her rule from various sectors of Philippine society, but during seven turbulent years in power she has survived at least three coup attempts and three efforts to impeach her.