The retired colonel who claims to have seized control of Papua New Guinea's military has threatened to use "necessary actions" to resolve the country's political stand-off.

Colonel Yaura Sasa has told reporters in Port Moresby that soldiers under his control fired several shots this morning as they stormed barracks and took defence force commander Francis Agwi hostage under house arrest.

The former defence attaché to Indonesia said the action did not amount to a military mutiny or takeover, but said he had been appointed commander by former prime minister Sir Michael Somare.

He called on Sir Michael and prime minister Peter O'Neill to return to parliament to resolve what he called the country's constitutional impasse within seven days.

"I once again am now calling on... both parties and the head of state to respect the constitution and comply with the orders issued by the supreme court immediately," he said.

"If this call is not heeded, I may be forced to take necessary actions."

Though he was appointed by Sir Michael, Colonel Sasa said he was a "neutral" party and insisted his actions were "not a military takeover".

"I assure the international community, our investors, this is not a military coup. I am intervening to uphold the constitution and I have made my intentions known and that the two parties comply with this promptly," he said.

"My task is restoring the integrity and respect of the constitution and the judiciary.

"I am now calling on the head of state (governor-general Sir Michael Ogio) to immediately implement Sir Michael's post as prime minister."

The press conference took a bizarre twist when Colonel Sasa had to answer the phone on the desk in front of him.

"I'm sorry, I'm right in the middle of the [inaudible]," he said. "Can you give me a call within the next 10 minutes?"

Arrested

A short time later, deputy prime minister Belden Namah told reporters that 15 of the 30 or so men supporting Colonel Sasa had been arrested.

Mr Namah, a former soldier, says the Colonel does not have the support of the wider military and that he should give himself up.

He says Colonel Sasa's actions amount to treason, which carries the death penalty.

"For Somare to use rogue policemen and rogue soldiers to pursue his own greed and selfishness is really a sad situation for a person who claims to be the father of the nation - you have lost sanity," Mr Namah said.

A senior source in the PNG defence force told the ABC that a group of soldiers overpowered guards at the Taurama barracks around 3:00am today.

They took the commanding officer captive then moved to Murray Barracks and placed Commander Agwi under house arrest.

When the conflict erupted last month, Commander Agwi recognised Mr O'Neill as the country's legitimate prime minister.

The Department of Foreign Affairs is warning Australians in Port Moresby to avoid travelling in the city because of "disturbances" at the barracks.

Brigadier General Francis Agwi photographed in 2002. ( Department of Defence )

Businesses across the city were closing this morning and workers were being sent home amid a tense atmosphere.

DFAT said it was concerned by the developments and said Australia's High Commissioner in Port Moresby has spoken to Mr O'Neill about the situation.

Prime Minister Julia Gillard said Australian officials were closely monitoring the situation.

Ousted

Sir Michael was ousted as prime minister and replaced by Mr O'Neill in August after his seat was declared vacant while he received medical treatment in Singapore.

Last month the supreme court ordered his reinstatement as prime minister and as an MP.

But despite that order Mr O'Neill remained the effective prime minister with the support of the public service, police, defence force and most MPs.

Last week there were rowdy scenes in the parliament when Sir Michael walked in, brandishing the court order and demanding his reinstatement.

He was warned by Mr O'Neill that he could be arrested if he showed up again.

Today a former commander of the PNG defence force, General Jerry Singirok, said the politicians must sort themselves out in order to end the army mutiny.

"I am just calling on the speaker for parliament, Jeffrey Nape, to convene parliament and O'Neill and Belden Namah's group come and resolve this issue on the floor of parliament with Sir Michael Somare and his group," he said.

"I think that's the only way that we can resolve this."