Zimbabwe President Robert Mugabe, his wife Grace and two key figures from her G40 political faction are under house arrest at Mugabe's "Blue House" compound in Harare and are insisting the 93 year-old finishes his presidential term, a source said.

The G40 figures are cabinet ministers Jonathan Moyo and Saviour Kasukuwere, who fled to the compound after their homes were attacked by troops in Tuesday night's coup, the source, who said he had spoken to people inside the compound, told Reuters.

Mr Mugabe is resisting mediation by a Catholic priest to allow the former guerrilla a graceful exit after the military takeover.

The priest, Fidelis Mukonori, is acting as a middle-man between Mr Mugabe and the generals, who seized power in a targeted operation against "criminals" in his entourage, a senior political source told Reuters.

The source could not provide details of the talks, which appear to be aimed at a smooth and bloodless transition after the departure of Mr Mugabe, who has led Zimbabwe since independence in 1980.

Mr Mugabe, still seen by many Africans as a liberation hero, is reviled in the West as a despot whose disastrous handling of the economy and willingness to resort to violence to maintain power destroyed one of Africa's most promising states.