Louise Williams, Jakarta – In the first sign of a co-ordinated opposition movement, pro-democracy figurehead, Megawati Soekarnoputri, and Muslim leader, Amien Rais, publicly denounced President Soeharto yesterday in front of masses of cheering students in the central Javanese city of Yogyakarta. Their appearance, billed as a political discussion at Yogyakarta's Islamic University, is their first together since Mr Rais proposed a pro-democracy alliance earlier this month to challenge President Soeharto's bid for a seventh five-year term, due to begin in March.

Punching her fist in the air, Ms Megawati – the popular daughter of Indonesia's founding President Sukarno – told about 1,500 students: "Indonesia's situation is like the Titanic, and President Soeharto is taking no action. I reject President Soeharto's re-election because Indonesia is not only facing an economic crisis, but a crisis of belief in the Government."

The lecture hall was packed to capacity and hundreds more students watched on TV monitors outside as participants criticised collusion, corruption and nepotism in the Soeharto Government.

Within Indonesia's tightly controlled political system there is no mechanism which allows either Ms Megawati or Mr Rais to stand against President Soeharto. Indonesia's handpicked Parliament has elected President Soeharto unopposed for over three decades and is expected to re-elect the 76-year-old strong man in March, despite mounting calls for his resignation and the continuing economic meltdown.

But the public movement against the Soeharto Government remains significant in a nation where criticising the President can be punished as treason, with a maximum penalty of death. Mr Rais, who heads the 28 million-strong Muhammadiah Islamic organisation, told the cheering crowd: "Indonesia used to be an Asian tiger, now it is an Asian beggar. Thirty years of no change, enough is enough. The man at the top must be held responsible."

Further east in the provincial town of Probolinggo, security forces reported about 1,000 people had attacked and looted shops, demanding shopkeepers hand over supplies of basic food such as rice, sugar and cooking oil. East Java has been hit by a number of food riots since the sharp devaluation in the rupiah triggered panic buying.

The dramatic collapse of the rupiah is sending prices spiralling and forcing mass layoffs, just ahead of the year's most important Muslim holiday of Idul Fithri, when Indonesia's majority Muslims are obliged to return home to their villages for elaborate celebrations. The Australian Foreign Minister, Mr Downer, was due to arrive in Jakarta late last night, and faces the difficult task of steering Australia's close bilateral relationship with the Soeharto Government at a time when the economy is on the verge of collapse.

The New Zealand Government has warned its companies against giving credit to Indonesian firms, saying the crisis meant major corporations were not paying their debts.

At an earlier meeting in Jakarta at the weekend, Mr Rais called for the support of other community organisations, saying he and Ms Megawati could not challenge the Government alone. Mr Rais had also called for the support of Indonesia's most powerful Islamic leader, Mr Abdurrahman Wahid, who leads the 38 million-strong Nahdlatul Ulama (NU). However, Mr Wahid has since suffered a stroke and remains in intensive care in hospital in Jakarta.

Political analysts say Ms Megawati has little chance of succeeding in her bid to replace President Soeharto, because she remains banned from participating in mainstream politics and faces the threat of a military crackdown if she tries to mobilise her supporters.