(REUTERS) -- Papua New Guinea's governor-general decided on Tuesday that the two men claiming to be the resource-rich country's prime minister must negotiate a solution, leaving a tense political deadlock unresolved.

The impasse prompted police to call for calm in the capital, Port Moresby, which has a reputation for street violence. Parts of the city are ruled by raskol criminal gangs.

Heavily armed police protected Government House on Tuesday, but elsewhere in the city life went on as usual. Packed buses took commuters to and from work and crowded vegetable markets operated as normal. Talk-back radio and internet chatrooms, however, were preoccupied with the political crisis.

PNG's Supreme Court ruled on Monday that Sir Michael Somare, who was toppled while overseas receiving treatment for a heart ailment, should be reinstated immediately.

But Peter O'Neill, who replaced Somare and is recognised by parliament as the legitimate prime minister, has rejected the court ruling and refuses to step down.

As parliament spoke today I am the prime minister of this country and Somare is trying to hijack it with some hooligan policemen, said O'Neill after barging through a police barricade to see the governor-general late on Tuesday.

Governor-General Michael Ogio was going to swear Somare in on Tuesday but, after talking with O'Neill at Government House, decided to meet with Somare on Wednesday and order the two men to negotiate a settlement, said the governor-general's office.

He has decided to hear both sides of the story and will get both parties to sit down and negotiate, Ogio's media officer said.

The reinstatement of Somare is seen by residents and business leaders in Port Moresby as the most likely way to resolve the stand-off and is unlikely to inflame the situation.

We are not expecting any trouble, said one PNG businessman. The army, police and people seem to have accepted the court's ruling as the legal answer to the stalemate.

Neither Somare nor O'Neill has enough support to mobilise widespread or violent street protests.

Somare's supporters argue the court ruling that the O'Neill government was illegal automatically overturns any action taken by it since Somare was toppled.

There are heightened political tensions within Port Moresby with two, as it were, alternative prime ministers. This is unknown terrain in Papua New Guinea, Australian Foreign Minister Kevin Rudd earlier in the day.

We don't want to see blood on the streets. We heard some gunshots last night, he told Australian media.

THE CHIEF

The ailing Somare, 75, said before the judgment that he was willing to govern the country. However, Somare's party has suffered mass defections and is now in a minority in parliament.

Talkback radio callers generally supported the court ruling, with some saying Somare should be allowed to rule even if he has only minority support in parliament because elections are only six months away in June 2012.

PNG's longest-serving prime minister, affectionately known as the Chief after leading the country to independence in 1973, Somare has left open the question of whether he would run at the next elections.

PNG, a country where the majority of people live subsistence lives despite its abundant mineral wealth, has a turbulent history and corruption is rife.

A 12-year secessionist rebellion on the island of Bougainville, the longest running conflict in the Pacific, forced the closure of the giant Panguna gold and copper mine.

The army topple the government during the rebellion in 1997 for bringing in mercenaries to try to end the Bougainville conflict, which ended with a peace treaty in 2001.

Despite PNG's robust politics, which have seen governments in the past toppled as lawmakers change party allegiances, the nation's golden goose resource sector has largely been left unhindered by the turmoil.

PNG's economy is tipped to grow 7.8 percent next year, driven largely by the construction of a massive liquefied natural gas project.

U.S. oil giant ExxonMobil leads a consortium building the country's biggest-ever resource project, a $15.7 billion LNG project due to come on stream in 2014. The project is expected to produce 6.6 million tonnes per annum and could see GDP increase by 20 percent.

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