Tunisia prepared to unveil a new government of national unity Monday as the interim leadership struggled to impose order and fill a power vacuum after the ouster of veteran leader Zine El Abidine Ben Ali.
The government is set to include ministers from the old regime, members of the opposition and independent figures, an opposition leader said.
Presidential and parliamentary elections are set to be held in two months.
Opposition leader Maya Jribi said earlier that the executive would exclude forces loyal to Ben Ali, who resigned and fled to Saudi Arabia on Friday after 23 years in power amid a wave of protests against his regime.
Prime Minister Mohammed Ghannouchi, a former close ally of Ben Ali, was set to stay on. Speaker of parliament Foued Mebazaa has taken over as interim president in the wake of Ben Ali's abrupt departure with backing from the army.
Government talks with legal political parties -- excluding the Communist and Islamist parties banned under Ben Ali -- were held on Sunday as fierce gun battles broke out in Tunis and near the presidential palace in Carthage.
The army fought with members of Ben Ali's presidential guard near the palace late on Sunday during dusk-to-dawn curfew hours in Carthage -- a wealthy suburb and archaeological site north of Tunis city centre on the Mediterranean coast.
The army said two gunmen were shot dead near the interior ministry in central Tunis and two more were arrested. Police officers said that eight people were wounded in the fighting in Tunis and taken to hospital.
The outcome of the gunfight near the palace was not immediately clear.
"The old regime is trying to sow panic in the population," Mustapha Ben Ahmed, a trade unionist walking on an avenue in the centre, said on Monday.
"That bastard Ben Ali ran away and left the country to burn," he said.
The prime minister has vowed there will be "zero tolerance" for anyone threatening the security of the country after the authorities arrested the former head of Ben Ali's guard for allegedly plotting against the state.
Ben Ali's nephew, Kais Ben Ali, has also been arrested along with 10 other people in the central town of Msaken -- the Ben Ali family's ancestral home -- for allegedly "shooting at random" from police cars.
Ben Ali's ouster has sent shockwaves around the Arab world as he was the first Arab leader in recent history to be forced out by street protests.
Egyptian Foreign Minister Ahmed Abul Gheit on Sunday downplayed prospects of the revolt spreading to other Arab countries, calling it "nonsense".
There have been four attempted public suicides in Algeria in the past week in apparent copycat replays of last month's self-immolation of a 26-year-old graduate in Tunisia which triggered the revolt against Ben Ali.
Tunisia has been in a state of chaos since Ben Ali's downfall, and observers warned that change in the North African state would be far from smooth because of the tightly-controlled system of power put in place by the former leader.
A few cafes and groceries re-opened on Monday in the centre of Tunis -- the scene of violent clashes in the days running up to Ben Ali's flight -- as security forces continued their lockdown of the city centre.
Interim president Mebazaa said at the weekend that all Tunisians "without exception" would now be able to take part in national politics and called for a unity government for "the greater national interest".
Secular leftist Moncef Marzouki declared his intention Monday to compete for the presidency.
Human rights groups say dozens of people were killed after food protests which began last month escalated into a popular revolt against Ben Ali.
International powers including European nations and the United States have urged calm in Tunisia and called for democracy in the Mediterranean country after events that Tunisian bloggers have dubbed the "Jasmine Revolution".