A defiant Saddam Hussein appeared on Iraqi TV in military uniform last night.

It was a signal that his role was as defender of the nation after flatly rejecting the US ultimatum to go into exile or face war.

The Iraqi leader last appeared in a military uniform after the Gulf war.

The TV station, as well as state radio, also called on Iraqis to demonstrate across the country.

Soon after, about 5,000 demonstrators, many armed, gathered in Baghdad.

Waving portraits of the Iraqi leader, the chanted: "We sacrifice ourselves for you Saddam, with our blood and souls!" They carried banners that read, "Saddam is Iraq and Iraq is Saddam."

President Bush had given Saddam and his sons 48 hours to leave Iraq.

A statement by the Revolution Command Council, chaired by Saddam, said that Iraq did not choose its leaders "by decree from Washington, London or Tel Aviv".

Saddam warned that American forces would find an Iraqi fighter ready to die for his country "behind every rock, tree and wall".

But he made a last-minute bid to avert war, acknowledging that Iraq had once possessed weapons of mass destruction to defend itself from Iran and Israel, but insisting that it no longer had them.

"We are not weapons collectors," the official Iraqi News Agency quoted him as saying.

"When Saddam Hussein says he has no weapons of mass destruction, he means what he says," Saddam said.

Meanwhile, people in the capital mobbed bakeries and petrol stations in a frantic rush for supplies. The dinar, Iraq's currency, also lost ground, slumping to about 2,800 against the dollar, compared to 2,600 a week ago.

At Saddam International Airport, hundreds of passengers snatched up tickets to Jordan and Syria - the only destinations available yesterday.

The diplomatic exodus continued, with ambassadors from Greece and France taking the overland route to Jordan.

Diplomats from China, Germany and the Czech Republic left earlier in the week.