Thousands of people have takento the streets in the capital of the Maldives in support of former president Mohamed Nasheed, ousted in what appeared to be a military-backed coup earlier this week.

On Thursday Nasheed was confined to his family home in Malé, facing detention after a court issued an arrest warrant against him. However, the political fortunes of the democracy activist and environmental campaigner appeared to be improving when thousands ignored a heavy presence of security forces to cheer him as he attended Friday prayers at the main mosque.

Though the police played a key role in forcing the 44-year-old out and in subsequent violence directed at his supporters, they did not intervene on Friday.

Nasheed called on his successor, former vice-president Mohamed Waheed Hussain Manik, to resign and told reporters: "I am not asking to be reinstated. I am asking for fresh elections within the next two months. Dr Waheed has to resign.

"There has to be judicial reform and reform of the criminal justice system in this country. Status quo cannot be maintained. [The] international community needs to do more, they have to see the situation in Maldives, the real picture."

Nasheed, who won the Maldives' first democratic elections in 2008 with 54% of the vote, says he was forced to resign by a group of soldiers who threatened violence. The new government denies coercion. Presidential polls are due in 2013.

Almost all the Maldives' 350,000 inhabitants are Sunni Muslims and crowds began gathering at the 17th-century Hukuru Miskiiy mosque when the word spread that Nasheed would be present. Many chanted "Long live Nasheed, he is our president."

Hundreds then followed the ousted leader, surrounded by members of his Maldivian Democratic party (MDP), when he walked home nearby. "He is our president. We refuse to accept a military dictatorship," said 25-year-old Ismail as he marched. A second man said that supporters would not be cowed: "[Nasheed] will remain our president."

Malé appeared calm on Friday, if tense. Scores were injured in violence earlier this week, several seriously. International diplomats are arriving in the Maldives to broker a deal between the MDP and the new government – which includes many individuals close to former president Mamoon Abdul Gayoom, whose 30-year rule was ended by the 2008 elections.

Nasheed loyalists accuse Gayoom, or elements loyal to him, of engineering the crisis which led to their leader's resignation last week. Oscar Fernandez-Taranco, the UN assistant secretary general for political affairs, met Manik at the start of a three-day visit to urge both sides to negotiate and avoid violence. Manik has denied that his predecessor was forced out of office and has described his own appointment as constitutional.

Diplomats from India, Britain, the US and EU are in Malé, or are expected this weekend. A Commonwealth delegation also was meeting all the political parties.

"We told the president that at this time, it is very important to ensure the police and military operate on an entirely constitutional level to cool the temperatures. The fragility of the democratic transition here was clearly demonstrated by recent events," Akbar Khan, the delegation head, told Reuters.

India, which has changed its position repeatedly in recent days after strongly backing the new government earlier this week, is understood to have asked Manik to make sure his predecessor was not arrested.

Though the clashes earlier in the week were concentrated on Malé itself, violence occurred on Addu, the southernmost island in the archipelago. Nasheed told reporters on Friday: "Police and military are ransacking ... dragging people out from their homes. If [they are] MDP, they are spraying them with pepper [spray], beating them and arresting them. We are losing a country as we speak."

Much of the economy of the Maldives, a former British protectorate, depends on the luxury tourist trade. This appeared unaffected on Friday with flights operating as usual. Most visitors to the country bypass the capital and are taken directly by aeroplane or speedboat to island resorts. Nasheed, who has won a series of international awards for his efforts to increase awareness on global warming, said that if no new elections were scheduled his supporters would take to the streets.