Honduran security forces are patrolling the area around Brazil's embassy in the capital after clashes with supporters of ousted president Manuel Zelaya, BBC reported.
Mr Zelaya, who has taken refuge inside, accuses the interim authorities of attempting to "asphyxiate" the embassy by cutting off supplies.
The embassy's lights, water and phones have been cut off and the only contact is by mobile phone, Brazil's media say.
Honduran authorities have demanded Mr Zelaya give himself up to face trial.
But Brazilian President Luiz Inacio Lula da Silva expressed his complete support for the deposed Honduran leader and Brazil has warned Honduran authorities not to contemplate taking any action against the embassy.
Mr Zelaya made a surprise return from exile on Monday nearly three months after being forced out of the country at gunpoint, saying he wanted peaceful dialogue.
The US, Brazil and other governments have joined Mr Zelaya in calling for a negotiated settlement to the crisis.
A curfew has been imposed, airports shut and roadblocks set up on highways leading into Tegucigalpa.
'Asphyxiation'
Masked soldiers used truncheons, tear gas and rubber bullets to disperse thousands of Mr Zelaya's supporters early on Tuesday, and they are now patrolling the area around the embassy.
The demonstrators had defied the curfew imposed after Mr Zelaya made his dramatic appearance in the Brazilian embassy on Monday.
A protest leader, Juan Barahona, alleged that police had used live rounds, but this was denied as "impossible" by the interim deputy foreign minister, Martha Lorena Alvarado.
Another supporter of Mr Zelaya, Guillermo Amador, said many people had been injured and detained, but there has been no official confirmation of this.
Inside the embassy, the lights, water and telephones were cut off on Monday and the only contact is by mobile phone, Brazilian media say.
Reports suggest a generator is being used to provide electricity.
Some 70 supporters of Mr Zelaya are also reported to be inside, along with embassy officials.
Mr Zelaya told Venezuelan broadcaster Telesur that interim authorities were cutting off all supplies to the embassy.
"I think they are going to employ a strategy of asphyxiating the embassy by surrounding it, cutting off the food supply, asphyxiating the people inside in order to demonstrate their force and power, and to try and humiliate the people in here who are really trying to find a solution, for dialogue at a national level," he said.
Later he told AFP news agency he had spoken to soldiers and police on Monday to try to seek a way out of the crisis.
In an interview, interim leader Roberto Micheletti said he had no intention of confronting Brazil or entering its embassy.
He told Reuters news agency that Mr Zelaya could stay in the embassy for "five to 10 years" if he wanted to, but urged him to turn himself in to face charges of corruption and violating the constitution.
Earlier, Ms Alvarado, the interim deputy foreign minister, said she expected Brazil either to hand Mr Zelaya over or grant him political asylum.
Despite international condemnation of the circumstances of Mr Zelaya's removal from office, she told BBC Mundo, "that does not permit any embassy to use its diplomatic territory... to urge a civil uprising".
The interim administration in Honduras insists no coup took place - but a "constitutional succession" ordered by the courts and approved by Congress.
Brazil warning
Speaking in New York, Brazilian President Lula repeated his position that a "negotiated and democratic solution" must be found.
He urged Mr Zelaya to "be very careful not to allow any pretext for the coup plotters to resort to violence" - and warned Honduran authorities against trying to enter the embassy.
Earlier, Brazil's Foreign Minister Celso Amorim warned that any threat to Mr Zelaya or the Brazilian embassy would be a grave breach of international law.
Brazil has been keen to demonstrate a clear leadership role over this issue and throughout the Honduran crisis has adopted a very firm line against the coup leaders, says the BBC's Gary Duffy in Sao Paulo.
The European Union has called for calm - adding its voice to that of US Secretary of State Hillary Clinton, who said Mr Zelaya's return must not lead to violence.