Jayapura – This Irian Jaya capital erupted in euphoria late Friday as police gave in to fierce popular demand and let the banned Morning Star separatist flag continue flying.

Still hemmed in on three sides by scores of armed anti-riot police, more than 1,000 supporters of independence for the Indonesian province shouted Halleluliah, sang hymns of thanks and danced in circles beneath the flag which was supposed to have been lowered for the last time in Jayapura at sunset.

After an hour of tense negotiations as a 5.45pm deadline set by Jayapura police chief Lieutenant Colonel Daud Sihombing, came and went, Sihommbing said he would not force the flag to come down.

Earlier he had warned of "consequences" if it stayed aloft. But the fervent pro-independences masses refused, declaring they were ready to die in defence of the Morning Star – the symbol of the separatist movement in the remote half-island province.

Chief negotiator and evangelist preacher Tony Infandi pleaded with the crowds to accept the police orders, but in chorus they hollered their rejection and pledges of martyrdom. Returning to negoitiate a second time with Sihombing in the park in front of the independence supporters' headquarters, Father Infandi told Sihombing that he had exhausted all eforts to persuade the independence supporters to comply. "I've tried everything, but all of them, even women and mothers are telling me they are ready to be slaughtered."

Sihombing replied with another warning of the consequences from Jakarta. "Jakarta will know instantly what's happeneing here. Then what's going to happen," he said. "First they'll have a bigger reason for droppping more troops here. Secondly provocateurs will take advantage of the situation and third if setlers [non-Papuans] are injured I won't be able to stop the Laskar jihad flooding in," he said of an Indonesian armed extremist Muslim group. "If that happens there will be chaos here. Is that what you want."

Returning to the makeshift stage in front of the massed independence supporters, Father Infandi announced that police would not pull down the flag thesmelves. Roaring in jubiliation, the Christian independence supporters thrust their hands upwards in prayer, and yelled "Siallon!" – the local term for praise be to God. Infandri bleated "Halleluliah" on his microphone. Men adorned in the feathers of birds of paradise beat drums and men, women and youths, danced in circles, singing Indonesian language thanksgiving songs.

Pro-independence Papua Council member Zamack Taime said negotiations would continue through the night with the local government and parliamentarians over how long the flag could stay up. "How long, we don't know yet, but we want it to keep flying," he told AFP.

Taime said police had told them that "if that's what the people want, so be it," and that the rest was up to Jakarta. "Jakarta wants it to come down, and if it doesn't come down, they will send troops," he said. "The police here don't want to take action because of the people's fierce objection." "The people want the flag still in the sky," he said, speaking in halting English, "No more down."

Jubilant independence supporters shone a spot light on the Morning Star, fluttering next to a frayed red and white Indonesian national flag. Eariler at least four flag raisers were taken in by police for "insulting" the Indonesian flag, because it was smaller than the Morning Star alongside it.

Watching the euphoria from a police tent in Imbi Park, Sihombing said his decision not to pull the flag down himself, did not mean permission to keep it flying. "It's clear I will take action," he told AFP. "What kind of action is up to me – whether it is persuasive or repressive, we'll see. It depends on the state of things."