Politicians from the ruling coalition and the opposition have been unable to agree on a compromise presidential candidate, prompting fears of a power vacuum or the formation of two rival governments, as was the case at the end of the 1975-1990 civil war.
The army was deployed heavily in the capital on Friday, with tanks and troops at all major intersections, and the downtown area where the parliament building is located was declared off-limits.
Extra security measures were taken around a five-star hotel where dozens of anti-Syrian lawmakers have been staying for the past two months under guard for fear of assassination.
On Thursday, Michel Aoun, a Christian opposition leader, offered an 11th-hour solution to the political impasse, suggesting that his camp name an interim president and the ruling majority appoint a prime minister, but the offer was quickly rejected by the majority.
The ruling coalition, which has 68 deputies in the 127-member parliament, has repeatedly vowed to proceed with a simple majority vote if no agreement is reached.
But Hassan Nasrallah, the Hezbollah leader, has warned that any attempt by the ruling coalition, which has a slim majority in parliament, would be tantamount to a coup.
If there is no agreement on a presidential candidate to replace Lahoud, the president's powers could pass to the government, in line with Article 62 of the Lebanese constitution.
But Lahoud has vowed not to hand executive power to the government of Fouad Siniora, the prime minister, which he does not recognise.
He has previously floated the idea of appointing an interim military government and he could also declare a state of emergency.
The US and its local allies blame Syria for the deadlock. Hezbollah and its Christian allies, led by Aoun, say the US-backed majority wants to keep them from their rightful share in power and accuse Washington of trying to control Lebanon.
Bernard Kouchner, the French foreign minister, whose country has been leading efforts to resolve the crisis, said that "a miracle is still possible" but warned, "I think it is going to be a little complicated".
Kouchner left Beirut on Thursday after the latest in a series of failed mediation efforts.
The foreign ministers of Italy and Spain also voiced pessimism after a last-ditch attempt to get the rival sides to agree.
"I don't believe there will be an election and this will create difficult conditions," Massimo D'Alema, the Italian foreign minister, said.
The standoff between Siniora's government and Hezbollah began after the Shia group, empowered by its 34-day war with Israel last year, pulled its five ministers from the cabinet in November 2006.
The army has warned against internal strife and both sides accuse the other of arming their supporters.