Mr Gbagbo has been in negotiations with the UN over the terms of his departure, after being besieged by troops loyal to his rival Alassane Ouattara.
Gunfire and heavy fighting was reported at Mr Gbagbo's residence in Abidjan.
Mr Gbagbo insists he won November's run-off vote, but election officials found Mr Ouattara was the winner.
That result was certified by the UN, but Mr Gbagbo has refused to leave office.
Mr Gbagbo and his family are believed to be sheltering in the bunker of the presidential residence, which was controlled by his troops.
Two days of heavy fighting stopped late on Tuesday and negotiations with Mr Gbagbo carried on throughout the night.
But by Wednesday morning it appeared the patience of pro-Ouattara forces had run out.
"We are going to get Laurent Gbagbo out of his hole and hand him over to the president of the Republic," said Sidiki Konate, spokesman of Mr Ouattara's prime minister, Guillaume Soro.
'In the building' Laurent Gbagbo, cornered in a presidential bunker and faced with the defection of his generals, had been trying to negotiate his way out of trouble.
His surrender seemed imminent. "I want to live," he told French television.
But over the past few hours we have heard the boom of heavy artillery in the city and confirmation that Mr Gbagbo's residence is being stormed.
A negotiated ending might have helped ease tensions in this bitterly divided country. Now there is the risk of greater instability.
Civilians still trapped in Abidjan say there has been sporadic gunfire across the city with pro-Gbagbo militias still on the streets and growing fears of revenge killings.
But over the past few hours we have heard the boom of heavy artillery in the city and confirmation that Mr Gbagbo's residence is being stormed.
A negotiated ending might have helped ease tensions in this bitterly divided country. Now there is the risk of greater instability.
Civilians still trapped in Abidjan say there has been sporadic gunfire across the city with pro-Gbagbo militias still on the streets and growing fears of revenge killings.
Affousy Bamba, a spokeswoman for troops backing Mr Ouattara, told Reuters news agency: "Yes they [Ouattara forces] are in the process of entering the residence to seize Gbagbo.
"They have not taken him yet, but they are in the process, they are in the building."A resident who lives close to Mr Gbagbo's residence told Reuters of fighting and explosions.
"We can hear automatic gunfire and also the thud of heavy weapons. There's shooting all over the place. Cars are speeding in all directions and so are the fighters," Alfred Kouassi said.
A spokesman for Mr Ouattara said fighters had been given strict instructions not to harm Mr Gbagbo.
The BBC's Andrew Harding near Abidjan says the UN wants Mr Gbagbo to leave unharmed in order not to destabilise the country further. Mr Gbagbo still has strong support, having won 46% of the vote in the election, he adds.
Mr Gbagbo had earlier denied he was surrendering, saying he was only negotiating a truce.
"I won the election and I'm not negotiating my departure," he said.
"I find it absolutely incredible that the entire world is playing this... game of poker."
The BBC's John James, who is outside Abidjan, says it is not clear how much resistance pro-Ouattara forces will face as most of Mr Gbagbo's forces have laid down their arms.
It feels like it is the "endgame" for Mr Gbagbo, he says.
French armed forces chief Adm Edouard Guillaud told Europe 1 radio that Mr Gbagbo had twice been on the point of stepping down - on 1 April and 4 April - before pulling back.
He said Mr Gbagbo now had "no other choice" than surrender.
On Monday pro-Ouattara fighters launched a "final assault" and UN and French helicopters attacked Mr Gbagbo's military installations in Abidjan saying its aim was to protect civilians.
Ivorian turmoil
- 28 November: Incumbent Laurent Gbagbo and challenger Alassane Ouattara in election run-off
- 2 December: Electoral commission announces that Ouattara has won
- 3 December: Constitutional Council declaring Gbagbo the winner; UN says Ouattara was victor
- 30 March: Pro-Ouattara forces enter the capital, Yamoussoukro
- 4 April: UN launches air strikes on Gbagbo in main city, Abidjan
- 5 April: Three generals negotiate Gbagbo's surrender
Following Tuesday's ceasefire, the city passed a largely quiet night, apart from shootings blamed on gangs, but its population of four million remained indoors.
Civilians told the BBC they were very scared. Small groups have been walking out of the city with their hands raised in the air.In other developments, the EU imposed fresh sanctions on Mr Gbagbo on Wednesday, banning the purchase of bonds from his "illegitimate government".
Last November's election was intended to reunite Ivory Coast which split in two following a northern rebellion in 2002.
The electoral commission pronounced Mr Ouattara the victor, but Ivory Coast's Constitutional Council said Mr Gbagbo had won.
The US, the UN and the EU recognised Mr Ouattara as the winner, but both candidates had themselves sworn in as president and a stand-off ensued.
Skirmishes and battles between the rival forces have since taken place across Ivory Coast culminating in Mr Ouattara's troops sweeping into Abidjan at the end of March.
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