A security source in N'Djamena said a rebel column of about 300 vehicles had passed through the town of Ati and halted 250 km (150 miles) east of N'Djamena where a Chadian army column had moved up to confront it.

The rebels have waged a cat-and-mouse campaign for years against President Idriss Deby, whose position is bolstered by a defence treaty with former colonial ruler France that includes support from French ground and air forces based in Chad.

The most dramatic in a string of rebel offensives towards N'Djamena was repelled in April 2006 in fighting believed to have killed hundreds of people in the city.

European Union peacekeepers are due to deploy to the landlocked country's east in the coming weeks to protect hundreds of thousands of refugees from violence spilling over Chad's border with Sudan's war-torn Darfur region.

Chad and Sudan accuse each other of supporting rebel groups in their respective territories, though each denies the charge.

Chad's government said in a statement broadcast by state media that the rebels had moved into the town of Oum Hadjer, more than 500 km (300 miles) east of N'Djamena, on Wednesday, after crossing the border from Sudan earlier this week.

But the security source, who asked not be named, said the rebel column had already advanced much nearer the capital.

"They've passed Ati, they are now west of Ati and they've halted," the source said.

"There is a Chadian army column in front of them and there are other Chadian forces between them and the capital," said the source. He said there was no immediate danger for the city.

SCHOOLS CLOSED

Chadian army units nevertheless stepped up their presence around N'Djamena, taking up defensive positions on the main roads in from the north and east, a Reuters witness said.

Schools in the dusty city emptied as teachers sent children back to their families, though shops and markets stayed open.

"The war has nothing to do with us civilians. I'm going home as a precaution, so I don't get killed in the street," said Mahamat Adoum, one of many civil servants leaving government offices early to head home.

France's embassy closed the French school in N'Djamena and advised its citizens to limit their movements within the city, Radio France International reported.

The U.S. embassy advised Americans to avoid all travel to eastern Chad and to limit non-essential movements in the city.

EU foreign ministers and military commanders gave the final green light this week for a long delayed 3,700-strong peacekeeping force to deploy to volatile east Chad under a United Nations mandate.

Chadian rebels have previously threatened to attack the European force if it interferes in their campaign against Deby, although European commanders have pledged not to take sides.

Several of Chad's main eastern rebel groups abandoned a Libyan-brokered ceasefire late last year, triggering pitched battles in November and December that both rebel and governemnt sides said killed hundreds of fighters.