Fighters from the Seleka rebel coalition have pushed their way into Bangui after the collapse of a peace deal.
"This morning it was calm until 8 o'clock (7am GMT). Now there are explosions left and right. It's in the city. This is heavy weapons fire focused on the city's main axes," said a senior officer with a regional peacekeeping force, who asked not to be named.
The clashes have prompted France to send in more troops to secure the international airport.
The Seleka rebel coalition resumed hostilities this week in the mineral-rich former French colony, vowing to oust President Francois Bozize whom it accuses of breaking a January peace agreement to integrate its fighters into the army.
A Reuters reporter in the northern suburbs of the riverside capital said the rebels had taken control of the neighbourhood around Bozize's private residence, known as PK12. Rebels in civilian clothes had infiltrated other areas, residents said.
Government troops retained control of the city centre, home to the presidential palace.
As darkness fell on Saturday Bangui was left without electricity and water after the Seleka forces — who had seized the nearby town of Boali with its electricity station — turned off the power.
Many residents huddled in darkened homes with no access to radio or television. "We are in complete darkness without any information," said Saint Hardy, an accountant.
Nelson Ndjadder, a spokesperson for the rebels, said that his fighters had shot down a military helicopter which had been harrying their columns since Friday and would push onwards to the presidential palace.
Government spokesperson Crepin Mboli-Goumba said the government was still in control of the capital. "President Bozize is still in power," he told Reuters. "Bangui has still not fallen."
France's Le Monde newspaper, citing a diplomatic source, said Bozize's family had boarded a plane sent by Equatorial Guinea while he remained in Bangui. It was not possible to confirm that immediately.
UN officials, who asked not to be identified, said that mobs of the pro-Bozize civilians had blocked the exit from their compound when they tried to evacuate non-essential staff.
CAR remains among the least developed countries in the world despite rich deposits of gold, diamonds and uranium.
No threat to French citizens
Seleka, a loose umbrella group of insurgents, fought its way to the gates of the capital late last year after accusing Bozize of failing to honour an earlier peace deal to give its fighters cash and jobs in exchange for laying down their arms.
The violence is the latest in a series of rebel incursions, clashes and coups that have plagued the landlocked nation in the heart of Africa since its independence from France in 1960.
France, which already has some 250 soldiers stationed in the country, sent in another company of 150 troops to secure Bangui's international airport, a diplomatic source said.
"We have asked our citizens to remain at home. For the time being, there is nothing to be worried about," said the source. "There is no direct threat to our citizens at the moment."
The airport, close to the heart of the capital, would be an important exit point for France's 1 200 citizens who live in CAR, mostly in Bangui.
South Africa has sent some 400 soldiers to train Bozize's army, joining hundreds of peacekeepers from the Central African regional bloc. Regional peacekeeping sources said the South Africans had fought alongside the Central African Republic's army.
State radio had announced late on Friday that South Africa would boost its troop presence after Bozize met his South African counterpart Jacob Zuma in Pretoria.
Captain Zamo Sithole, senior operations communications officer at South Africa's National Defence Force said: "We are there in the CAR to protect our properties there, and our troops there."
A South African Defence Ministry spokesperson declined to comment. – Reuters