But at the end of a half-hour, cliffhanger speech he tiptoed back from political chaos, saying his government would delay a formal declaration of independence for an unspecified number of weeks, to allow for last-minute mediation.

Spanish police were reportedly standing ready to raid parliament and arrest Mr Puigdemont immediately if he declared independence, Bloomberg had reported.

But Mr Puigdemont's political allies will keep up pressure to respect the results of the October 1 referendum.

Catalans voted for independence by a 90 per cent majority, in a poll marred by violent attempts by Spanish police to prevent it. Turnout was only 43 per cent, partly reflecting the decision by 'No' voters not to take part in a poll that the country's constitutional court had declared illegal.

Recent opinion polls had put the region evenly divided on the question. On the weekend hundreds of thousands rallied in Barcelona declaring "Catalonia is Spain", but independence rallies have seen even greater numbers.

The Spanish government has declared its determination not to recognise any declaration of independence, threatening to use constitutional powers to remove the Catalan government. They have refused all requests for talks, saying the Catalans were acting illegally.

Mr Puigdemont said near the beginning of his speech that he wanted to contribute to reducing an "escalation of tensions" in Catalonia.

However he added his speech was "not a personal decision, it is the result of the [vote on the] first of October".

He said many Catalonians had, after years of power being centralised to Madrid, and after the violence of October 1, "come to the conclusion that the only way to guarantee the survival, not only of our independent rule but our social values, has to be based on Catalonia becoming its own state".

"We are not delinquents, we are not crazy, we don't want to overthrow the government," he said. "We are normal people and we want to go and vote... Catalonia now has won the right to be an independent country and to be listened to and respected."

"Today I assume the mandate for Catalonia to become an independent state in the form of a republic," he said.

After sustained applause from just over half the chamber, he then put them on ice.

"We're suspending the declaration of independence for a few weeks, because we want a reasonable dialogue, a mediation with the Spanish state," he said.

"This historic moment requires that we cease escalation, but we must have a clear willingness to move forward based on the results of the referendum."

He said there were public and private processes set up in recent days for mediation, at national and international levels, and "all must be taken very seriously".

After the speech the Catalan leader of the opposition Ines Arrimadas said "a declaration in instalments is the same as a declaration of independence", and criticised Mr Puidgemont for throwing the region in to chaos.

The speech was delayed by an hour. According to some local media reports it was due to last-minute attempts at mediation between Spain and Catalonia - others reported one of Mr Puigdemont's political allies had expressed dismay the speech did not go far enough.

Thousands of independence supporters surrounded the parliament with a sea of esteladas, the unofficial flag of Catalan separatism. They watched proceedings on big screens.

Helicopters flew overhead and Catalonian police trucks blockaded the building.

Before the speech European Council President Donald Tusk said independence would be "obviously be bad for the Catalans, for Spain and for the whole of Europe".

"Let us always look for what unites us and not for what divides us. This is what will decide the future of our continent."

Barcelona mayor Ada Colau also called for the president not to declare independence, saying it may "blow up the possibility of any space for dialogue and mediation".

On Monday Spanish prime minister Mariano Rajoy vowed that "Spain will not be divided and national unity will be preserved".

He told German newspaper Die Welt "We'll do everything that legislation allows to ensure that".

Spain has kept 4000 national police stationed in Catalonia, who were deployed there in advance of the referendum.

Spanish interior minister Jorge Fernandez Diaz said the region needed to get "back on the path of legality".

The Spanish prime minister has an option under the constitution to take over the Catalan government, dismiss the president and call elections.

In advance of the election they took control of some financial powers including civil servant pay.

It might also use legal powers to invalidate any independence declaration.

Spanish Deputy Prime Minister Soraya Saenz de Santamar??a told Spanish radio the government would take control of the regional government if Catalonia declared independence.

Catalonia's biggest banks, Caixabank and Banco de Sabadell, have decided to move their headquarters out of the region, and other major companies are also discussing the idea.