by Patrick Markey

TEGUCIGALPA  - The Organization of American States prepared to suspend Honduras on Saturday after a caretaker government refused to restore ousted President Manuel Zelaya and defiantly renounced the OAS charter in an apparent preemptive move.

The measure by Honduras to distance itself from the hemispheric group came after its rulers rejected an OAS demand to restore Zelaya, who was ousted by troops in Central America's worst political crisis since the U.S. invasion of Panama in 1989.

Honduras, an impoverished coffee and textile exporter, would be only the second country suspended by the Western Hemisphere's top diplomatic body after Cuba, which was barred in 1962 as Fidel Castro took the island toward communism.

After he gave Honduras a 72-hour deadline, OAS Secretary General Jose Miguel Insulza said the interim government showed no willingness to reinstate Zelaya, who antagonized opponents with an attempt to lift presidential term limits and by allying himself to Venezuela's left-wing President Hugo Chavez.

"There is a rupture of constitutional order and those who did this have no intention for the moment of changing this situation," Insulza told reporters in Tegucigalpa, the capital of the nation of 7 million.

The Washington, D.C.-based OAS will meet for an extraordinary session on Saturday to discuss the crisis.

The Obama administration, European governments and Zelaya's left-wing allies have widely condemned his ouster as a military coup. But the caretaker government has said it legally removed a president who violated the constitution.

The interim government remained defiant and announced it would renounce the OAS charter, a possible step toward quitting the organization.

"It is better to pay this high price ... than live undignified and bow the our heads to the demands of foreign governments," said Roberto Micheletti, named caretaker president by the Honduran Congress after Zelaya's ouster.

Some of Zelaya's left-wing allies have said they would travel with the exiled leader to Honduras on Sunday, but that plan seemed to be in doubt after the clash with the OAS.

The crisis has become a test for U.S. President Barack Obama in a region where he is trying to restore a battered U.S. image and Chavez is spreading his message of socialist revolution to counter Washington's influence.

The United States has criticized the coup and will decide next week whether to cut economic aid to Honduras, one of the poorest countries in the Americas. But the Obama administration has let the OAS take the lead in trying to resolve the crisis.

The upheaval has not affected coffee supplies, although Central American neighbors staged a two-day trade blockade of Honduras to protest against the coup.

Additional reporting by Gustavo Palencia and Mica Rosenberg; Editing by Eric Walsh.