Zimbabwe's ruling party will dismiss President Robert Mugabe on Sunday and reinstate Emmerson Mnangagwa, the vice-president he fired, two party sources told Reuters on Saturday, as ecstatic crowds celebrated the expected downfall.

Mugabe's 37-year rule has been effectively at an end since the army seized control on Wednesday, confining him to his residence, saying it wanted to target the "criminals" around him.

State television said Mugabe would meet military commanders on Sunday, quoting Catholic priest Fidelis Mukonori, who has been mediating in negotiations with the president.

Singing, dancing and hugging soldiers

But hundreds of thousands of people had no need for a formal signal that his time had ended as they flooded the streets of Harare, singing, dancing and hugging soldiers.

In scenes reminiscent of the downfall of Romanian dictator Nicolae Ceausescu in 1989, men, women and children ran alongside the armoured cars and the troops who stepped in this week to oust the only ruler Zimbabwe has known since independence in 1980.

Others marched towards his lavish 'Blue Roof' residence, but were kept away by soldiers.

Under house arrest in his compound, the 93-year-old has watched support from his party, security services and people evaporate in less than three days.

The sources said a ZANU-PF party central committee meeting scheduled for tomorrow would also dismiss Mugabe's preferred successor, his wife, Grace, from her role as head of the ZANU-PF Women's League.

Mugabe's nephew Patrick Zhuwao, speaking from an undisclosed location in South Africa, told Reuters the leader and his wife were "ready to die for what is correct" rather than step down in order to legitimize what he described as a coup.

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Protesters gathered on Saturday in Harare, calling for Zimbabwean President Robert Mugabe to step down. (Philimon Bulawayo/Reuters)

At one point during Saturday's demonstration, people lined the streets booing and jeering at a motorcade which left Mugabe's residence in Harare. A security source later told Reuters that Mugabe was not in a motorcade.

On the streets of the capital, Zimbabweans let their emotions run free as they spoke of their hopes for political and economic change after two decades of repression and deepening hardship.

"It's unbelievable. We've been living in captivity for a long time," said one man who came to the rally.

Some held aloft placards reading "Mugabe must leave Zimbabwe now!" and pumped their fists in the air in a sign of freedom. Others embraced the soldiers who seized power, shouting "Thank you! Thank you!" in scenes unthinkable even a week ago.

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Zimbabwe's military put Mugabe under house arrest early Wednesday, effectively ending his 37-year rule. (Philimon Bulawayo/Reuters)

Other demonstrators removed street signs with the name Robert Mugabe and stomped on them.

"People say that for the first time they are not afraid to come out on the streets and demonstrate. They don't think there will be reprisals because they believe that it is the end of Robert Mugabe in their country," said CBC's Margaret Evans, reporting from Harare.

"[There are] a lot of social instabilities because of the social economic downfall, so we are here just to gather up and support our military so they turn around the situation," said Nomsa Dube, a resident of Harare.

Zimbabweans flood streets to protest Mugabe1:03

Zimbabwe's state-run broadcaster on Saturday called the country "free and liberated" and showed previously unthinkable footage of speeches at a rally where speakers declared "This is the new Zimbabwe."

The military, which put Mugabe under house arrest this week, approved the demonstration that included people from across the political spectrum.

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A woman reacts as people march alongside an armoured personnel carrier during Saturday's demonstration. (Jekesai Njikizana/AFP/Getty Images)

With files from CBC News and The Associated Press