Lebanon's rival parties on Friday appeared headed for a fierce showdown as each side hardened its position in the country's political crisis after the failure of foreign mediation efforts.

Caretaker Prime Minister Saad Hariri on Thursday set the tone for the battle ahead after defiantly saying he would stand for another term despite Hezbollah's campaign to discredit him.

"We will go to the parliamentary consultations organised by the president on Monday and I remain committed as a candidate, in line with my parliamentary bloc's decision," Hariri said.

The standoff between the Saudi- and Western-backed Hariri and the Iranian-and Syrian-backed Hezbollah is linked to a dispute over a UN tribunal probing the 2005 assassination of Hariri's father, former premier Rafiq Hariri.

Turkey and Qatar this week abandoned efforts to break the deadlock, after Saudi Arabia also threw in the towel, raising fears of an escalation.

Set to play kingmaker in the dispute is Druze leader Walid Jumblatt who was expected to announce his allegiance to Hezbollah later on Friday.

The Druze chieftain has 11 deputies, among them five Christians and a Sunni, in parliament and, should he garner the backing of enough of his MPs, would guarantee Hezbollah and its allies impose their candidate for the premiership.

Hezbollah's camp has 57 seats in parliament against 60 seats for Hariri's coalition.

The militant party, blacklisted as a terrorist organisation by Washington, needs to secure the backing of eight deputies outside its alliance in order to come out the winner.

"It is clear that Jumblatt fears sectarian violence and has no other choice but to back Hezbollah," said one official close to his parliamentary bloc.

"We are hanging by a thread and maybe if Hezbollah has its way the situation won't escalate into violence," he added, requesting anonymity.

Hezbollah last week brought down Hariri's unity government because of the dispute over the UN-backed Special Tribunal for Lebanon (STL) set up in the wake of Hariri's assassination.

Tension soared further after the Netherlands-based court earlier this week issued a sealed indictment in the case which Hezbollah has said will implicate party members.

President Michel Suleiman is to begin on Monday consultations with parliamentary groups on appointing a new premier.

Hezbollah and its allies are widely expected to nominate Omar Karameh, who has already served twice as premier.

According to Lebanon's power-sharing system, the president must be a Maronite Christian, the premier a Sunni Muslim, and the speaker of parliament a Shia Muslim.

Ahmad Fatfat, an MP with Hariri's bloc, said in the event his camp did not manage to garner enough votes in parliament for Hariri to be reappointed premier it would not join a government led by Hezbollah and its allies.

"We are still confident we can garner the majority in parliament to nominate Hariri but in the event the other side manages to win, I don't believe we will take part in such a government," he said.

The seemingly intractable political crisis has sparked fears of sectarian violence similar to that in May 2008, when fighting between Sunnis and Shiites left some 100 people dead and brought the country close to civil war.