The Catalan President Carles Puigdemont has backed down on an immediate declaration of independence from Spain.
Catalan regional government president Carles Puigdemont arrives to give a speech at the Catalan regional parliament in Barcelona. Photo: AFP
Mr Puigdemont told the regional parliament that while he has a mandate for independence, he wanted to suspend it to allow dialogue with the Madrid government.
"Since the death of Franco, Catalonia has helped Spanish democracy ... we have modernised Spain," he said.
"Spain didn't invest in Catalonia and they didn't respect the language of Catalonia."
"The yes to independence, it won in this referendum. Even though we had to fight against violence."
He told MPs an international mediation process would be the most effective way forward.
A referendum was held last week, and more than 90 percent of Catalans who voted favoured separation, he said.
However, turnout was only about 43 percent, and hundreds of thousands of people have since rallied to discourage any breakaway.
"The ballots say Yes to independence, this is the will that I want to go forward with," Mr Puigdemont told parliament.
"At this historical moment as the president of Catalonia, I want to follow people's will for Catalonia to become an independent state."
There was speculation that he was about announce a unilateral declaration of independence from Spain following a disputed referendum, but the session of the regional parliament was delayed by an hour, amid growing demands for him to drop plans to break away.
Reports said Catalan party leaders were meeting before the session began.
Catalan police have been posted outside the parliament in Barcelona, sealing off the grounds to the public.
A large pro-independence rally is currently taking place in the area.
Earlier, the mayor of Barcelona urged Mr Puigdemont and Spanish Prime Minister Mariano Rajoy to "de-escalate" the crisis.
The Madrid government called on the Catalan leader "not to do anything irreversible, not to pursue a path of no return and not to make any unilateral independence declaration".
And the president of the EU's European Council has appealed to him to respect Spain's constitutional order.
What security measures are being taken?
About 300,000 people took to the streets of Barcelona in protest at police actions during Sunday's referendum. Photo: AFP
The Catalan police force, the Mossos d'Esquadra, closed the Ciutadella Park, where parliament is located, early in the day, positioning vans near the entrances and alongside parliament.
The authorities said the measures were "for safety reasons".
The Catalan National Assembly (ANC), a non-party grassroots movement, earlier urged supporters in a tweet to come to the parliament district to "defend" the vote for independence.
Expectations were high that Mr Puigdemont will ask parliament to declare independence on the basis of the referendum law it passed last month.
Parliament, which is dominated by pro-independence parties, would then have 48 hours to vote.
Barcelona's mayor, Ada Colau, has urged Mr Puigdemont not to declare independence. She also called on Mr Rajoy to rule out direct control from Madrid.
European Council President Donald Tusk said: "A few days ago I asked Prime Minister Rajoy to look for a solution to the problem without the use of force, to look for dialogue, because the use of dialogue is always better than the argument is better of force.
"Today I ask you [Mr Puigdemont] to respect in your intentions the constitutional order and not to announce a decision that would make such a dialogue impossible.
"Diversity should not and need not lead to conflict whose consequences would obviously be bad for the Catalans, for Spain and for whole of Europe."
How is Madrid likely to react?
Mr Rajoy is due to appear in Spain's parliament on Wednesday. He has already said any declaration of independence by Catalonia would "lead to nothing".
Under Article 155 of the constitution, his Spanish government could suspend devolution.
The leader of Spain's main opposition party, Pedro Sánchez of the Socialists, has said his party would back action by the government "in the face of any attempt to break social harmony".
A huge demonstration to support the unity of Spain, on Sunday in Barcelona. Photo: AFP / PAU BARRENA
A stream of companies have announced plans to move their head offices out of Catalonia in response to the crisis.
It is one of Spain's wealthiest regions, accounting for a quarter of the country's exports.
Publishing company Grupo Planeta was the latest to announce it would move from Barcelona to Madrid if there was a declaration of independence.
Do the separatists have support internationally?
The European Union has made clear that should Catalonia split from Spain, the region would cease to be part of the EU.
A European Commission spokesman told Reuters news agency it called on "all those concerned to get of this confrontation as quickly as possible and to start dialogue".
They said the EU had confidence "in the capacity of Prime Minister Rajoy to manage this delicate process in full respect of the Spanish constitution and the basic fundamental rights of the citizens".
Austrian Finance Minister Hans Jörg Schelling warned the effects of Catalan independence could spread beyond Spain.
"I hope that this won't lead to a crisis in the euro and in the EU but the danger naturally exists because extreme positions are clashing," he said.
How did we reach this crisis?
- BBC