Mugabe and Tsvangirai continue to be at loggerheads for months amid mounting tension in a country where Mugabe's opponents say hundreds of political activists were killed during the last presidential election.

"We agreed to work together... as a compromise to enable us to sort things out, establish peace, political stability, now some are dragging their feet," the veteran leader told more than 4, 000 of his ZANU-PF party supporters, adding the uneasy arrangement with arch-rival Tsvangirai's Movement for Democratic Change (MDC) had not solved the country's problems and should be dissolved.

"The GPA cannot be allowed to continue," he added, referring to the Global Political Agreement with the MDC, the former opposition party that joined ZANU-PF in a shaky unity government in February 2009.

The coalition government had been rent by disagreements over how to handle the country's massive debt and the food shortages, and internal haggling over who gets key jobs.

"What it has done is to reveal and expose to us what we did not know. Now we know this creature called the MDC, has no policy, no ideology, no philosophy except change, change," he said, opening the conference.

Mugabe, who has for months been calling for fresh elections, feels the MDC had not honoured the deal.

At 86 and Africa's oldest leader, Mugabe has signalled he wants elections to be held next year, but the MDC has said key reforms must be put in place first to ensure a free and fair vote.

ZANU-PF delegates at the party conference in the eastern city of Mutare, however, are expected to rubber stamp Mugabe's push for polls.

"Every delegate is ready for the battle of elections next year," Mike Madiro, a ZANU-PF provincial chairman, earlier told AFP.

In March 2008, Tsvangirai won the presidential election defeating Mugabe, but he fell short of the required majority resulting in a run-off ballot which the MDC leader refused to take part in, allowing Mugabe to win unopposed.

On Thursday, Tsvangirai said only a presidential vote would address the issue of "illegitimacy" following the disputed run-off poll, but he refused to specify any date when elections should take place.

The MDC has previously said that credible polls are not possible until 2012 at the earliest.

Mugabe also used the conference on Friday to warn British and US companies in Zimbabwe that they faced nationalisation if the international community failed to drop sanctions against Mugabe and his inner circle.

"Why should we continue having companies and organisations that are supported by Britain and America without hitting back? Time has come for us to revenge," he said, referring to laws that allow him to take the companies over.

"We can read the riot act and say this is 51 percent we are taking and if the sanctions persist we are taking over 100 percent."