SAN JOSE: Costa Rican President Oscar Arias, who is mediating the Honduras crisis talks, proposed that ousted Honduran leader Manuel Zelaya return to office under the terms of a general amnesty.

Arias, a Nobel Peace Prize winner, made the suggestion to representatives of the deposed leader and de facto Honduran president Roberto Micheletti at talks underway here, while in the Honduran capital, Tegucigalpa, Zelaya's supporters took to the streets demanding his return.

The seven-point proposal envisions Zelaya's return to power at the head of a government of "national reconciliation," and the declaration of a general amnesty absolving those who participated in and opposed his June 28 ouster.

"It's fairly probable we'll have an agreement within 48 hours," a diplomatic source close to the talks told AFP before talks began.

Arias' proposal would see presidential elections moved up to November, with control of the army transferred to the Supreme Electoral Tribunal a month before so military forces could "guarantee a transparent and smooth voting process."

But Micheletti has repeatedly expressed his strong opposition to Zelaya's return or the possibility of the deposed leader serving out the remainder of his term until January 27, 2010.

Arias' proposal would also require Zelaya to "expressly renounce" plans to hold consultative votes seeking to gain support for constitutional changes to terms limits.

His attempts to shore up support for changes to the constitution was the precipitating factor in his arrest and expulsion from Honduras by the country's military last month.

For the third day protestors in Tegucigalpa blocked roads, including some around the capital. Some 2,000 filled a southern boulevard, yelling "What's our president's name? Manuel Zelaya!"

In the north, altercations between opposing groups of demonstrators resulted in violence that left several protestors with minor injuries.

Honduras's military was on alert, watching the demonstrations -- and for a threatened attempt by Zelaya to return to the Central American country .

US officials have already warned that any attempt to return could jeopardize negotiations between his and Micheletti's representatives.

"Tensions are very high," US State Department spokesman Robert Wood said in Washington.

Zelaya tried two weeks ago to enter Honduras on a Venezuelan jet but was prevented from landing at the main airport by Honduran military vehicles parked on the runway.

He has said he will give the Arias-mediated talks until late Saturday to reach an agreement acceptable to him, and continues to insist he will return to the presidency.

Zelaya's strongest ally, Venezuelan President Hugo Chavez, said the ousted head of state will be restored to power.

"Zelaya is going to enter Honduras, let's see what those thugs do," Chavez said, referring to Micheletti government.

Rumors have swirled that Zelaya might try to cross over into Honduras by land from Nicaragua, possibly with Venezuelan or Nicaraguan military units.