As La Confianza stirs to life at daybreak, farmers ride bicycles or buses to lush green fields of African palm trees, where they harvest high-hanging fruit using poles tipped with hooked knives.

On the way, they cross paths with neighbours carrying automatic rifles to an entrance checkpoint set up under a red banner emblazoned with the face of communist revolutionary Ernesto "Che" Guevara, and the words "Land Liberated by the Unified Farmworkers Movement".

This collection of tin and wood shacks boasts a health centre, a school, a meeting hall and a store for 380 poor families, who are among thousands of once-landless workers now holding about 12,000 acres (5,000 hectares) of plantations they seized from one of Honduras' richest men.

The settlement, whose name translates as "trust", has no electricity, running water or indoor plumbing, but residents call it a model settlement of complete equality, and they want to replicate it throughout a country where almost half the population lives on less than $1.25 (80p) a day.

The land seizures have inspired similar takeovers elsewhere in Honduras, alarming the nation's business class and raising fears of spreading political violence. They also have become a rallying point for a broad leftist coalition that has grown around ex-President Manuel Zelaya since he was ousted in a coup that bitterly divided the country three years ago.

"This is a project about land for farmworkers, a political project in which we have invested everything, a life project which must triumph not only here but in all of Honduras," said Angel Flores, a 54-year-old former bricklayer who is now a leader of the occupation, as a pair of young men nearby practiced their marksmanship with semi-automatic pistols.

Guns have often come into play in the struggle over the land owned by billionaire Miguel Facussé. More than 60 people, most of them farmers, some of them Facussé employees, have been killed over the past three years in the conflict over the Bajo Aguán valley, according to activists, police and Facussé's company.

Zelaya, the son of a wealthy timber and ranching family, alarmed powerful Hondurans by veering left after becoming president in 2006 and allying himself with Venezuelan leader Hugo Chávez. He was deposed by armed soldiers on 28 June 2009, after ignoring a supreme court order to cancel a referendum seeking approval to change the constitution.

The coup was widely seen as an attempt to protect the interests of Honduras's political and business elite and outraged domestic leftists, including the long-established farmworkers movements, while isolating the country internationally.

Amid the turmoil after Zelaya's ousting, thousands of farmworkers seized about 27,000 acres (11,000 hectares) owned by Facussé's Corporacion Dinant, and demanded ownership of the property, which holds lucrative plantations of African palm trees.

In fact, the land itself once was owned by many of the families now trying to take it back. The government gave the land to farmers who cleared and settled it in the 1970s, but did not let them sell the property. They formed co-operatives that raised food and other crops, but went bankrupt after Honduras opened its economy to free trade.

A 1992 law erased the ban on selling the land and Facussé joined other wealthy Hondurans in buying up large tracts. Pro-farmworker activists complain about the way the land was sold and say the change aggravated inequality in a nation where 72% of the poorest landowners hold just 11.6% of cultivated land.

Facussé, a Notre Dame graduate in his 80s who has long been part of the country's business elite, ordered the planting of the palms, which take more than a decade to reach full production, and promoted them as an environmentally friendly development that could fight global warming and produce biofuels. A World Bank agency provided loans to back the project.

After the initial seizures, Facussé won court orders to evict the farmers. Hundreds of soldiers and police raided the territory and wrested back more than half of it, frequently after violent confrontations.

"Facussé's guards have been hunting us like rabbits. That's why we decided to defend ourselves," said Vitalino Alvarez, spokesman for the farmworkers' movement near the Caribbean coast.

Dinant spokesman Roger Pineda blamed the deaths on clashes between farmworkers themselves competing for seized land. When five soldiers were wounded in an April ambush, armed forces chief Rene Osorio blamed "armed peasants trained by Venezuela and Nicaragua."

Alvarez, who wears a licensed pistol when out in public, denied any role in the ambush or any backing from those leftist governments. But he said his supporters were armed for self-protection, and added, "We'll defend this land with all the means at our disposal."

The government eventually backed off the evictions, saying it would be too difficult to dislodge the 5,000 farmers in the Aguán valley. Instead it offered last year to buy the land and sell it back to the workers.

That deal seemed complete last month when leaders of Alvarez's Unified Farmworkers Movement of Aguán signed an agreement with Honduran president Porfirio Lobo, with the farmers due to receive most of the land they still hold and repay the government $16m through a long-term, low-interest loan.

But the eviction orders remain in force because the government failed to pay Dinant for the property by the 8 February deadline set in last year's offer, said Pineda, the company's spokesman. The farmworkers, meanwhile, have seized more land, and are inspiring takeovers by other poor Hondurans, who have occupied thousands of acres elsewhere. "We will comply with the agreement to avoid more violence," Alvarez said. "We will pay the government for the land, but our struggle continues and we will occupy more land."

The conflicts already have led international banks to cancel large loans while businesspeople worry the strife could further damage an economy that relies heavily on agricultural exports.

"Sugar and the African palm are the backbone of the Honduran productive system, so those attacks against them involve a political and symbolic confrontation," said Guillermo Matamoros, president of the Honduran College of Economists, a professional association.

He said the government, still scarred by international condemnation of the coup, is too timid to halt the takeovers "for fear of unleashing an armed confrontation. President Lobo does not want the international community jumping on him, accusing him of being an oppressor."

The movement is a rich source of potential support for Zelaya, who returned to his country last year and has launched his own political party, appealing to a coalition ranging from public school teachers to nurses to farmworkers. Zelaya's wife, Xiomara Castro, is set to be the party's presidential candidate in the 2013 elections, while he wants to become a member of Congress.

Meanwhile, at La Confianza, the farmers are building "a socialist model without mentioning the word socialism," Flores said. Residents helped build the community's nine dirt streets and 10 avenues, along with the health centre and other facilities. They live in simple homes on equal-sized lots.

Jonny Rivas, another movement leader, said all residents of La Confianza are equal partners in cooperatives that sell palm oil. Movement leaders say they earned about $3m from the business last year.

"The waiting list to be part of the movement is endless," Rivas said. "We can't take them because we don't have enough land." Alvarez noted that the situation remains dangerous. Any eviction, he said, "could lead to a conflict that no one wants because it could be impossible to stop."