ASUNCION, Paraguay (AP) _ Latin American leaders and the United States urged Paraguay's military chief to follow orders that he surrender power, fearing that the country's recent return to democracy may be endangered.

Gen. Lino Oviedo, 54, was holed up inside an army barracks this morning after refusing President Juan Carlos Wasmosy's order to resign.

Wasmosy, who in 1993 won Paraguay's first democratic elections in nearly 50 years, fired Oviedo on Monday for insubordination. He said the general had violated a constitutional ban against military participation in politics.

The flamboyant general has made no secret of his ambition to be the 1998 presidential candidate for the ruling Colorado Party. The military has ruled Paraguay for most of its history.

Radio reports said Oviedo had pressured Wasmosy and party officials to delay scheduled Sunday elections to select party leaders.

Conflicting reports regarding the status of the standoff circulated this morning.

Foreign Minister Luis Maria Ramirez Boettner told Spain's Radio Nacional today that Oviedo would abandon the barracks and cede power.

``Oviedo will quietly hand over his command tomorrow,'' Ramirez told Radio Nacional, adding that there is ``no armed movement'' against the government.

But Paraguayan senate vice president Ramiro Campo Severa told Asuncion radio station Nanduti that Wasmosy had offered to resign to avoid bloodshed. Sources close to Wasmosy denied the report.

The White House said in a statement it was watching the standoff with ``grave concern,'' and urged ``all Paraguayan military to abide by the constitutional order.''

The U.S. embassy called on Oviedo to step down and said the situation was a serious ``threat to democracy.''

After he was sacked, Oviedo, a cavalry general, withdrew to the First Army Corps, a 4,000-man garrison that includes the First Cavalry Division, on the outskirts of the capital.

Sentries at the barracks turned away U.S. Ambassador Robert Service as well as the ambassadors of Argentina, Brazil and Uruguay, who sought to meet with Oviedo.

Wasmosy had received messages of support from the capitals of most Latin American countries as well as backing from the navy and air force, the Catholic church and all of Paraguay's political parties.

Cesar Gaviria, secretary general of the Organization of American States, said the hemispheric body supports Wasmosy.

The senate and house of deputies convened a joint meeting and said they would remain in session until the crisis is resolved.

Although promising firm action, President Wasmosy sent no forces to the barracks. He called Oviedo's refusal to resign ``senseless ... an absurd act of aggression.'' He signed an order stripping him of command and banning him from office for 10 years.

Oviedo played a key role in the bloody 1989 coup that toppled President Gen. Alfredo Stroessner, ending his 35-year reign.

Oviedo's backing within the army lies chiefly with cavalry units, whose officers have received the best assignments during his term as commander, a fact resented by officers in other branches.

His civilian support is principally among poor farmers, most of whom live in extreme poverty in the country's interior.

Paraguay, a country of 5.3 million people, achieved independence from Spain in 1811.