Papua New Guinea's Supreme Court has ordered the nation's lawmakers to reconvene in five days to debate a motion of no confidence in Prime Minister O'Neill, almost a month after parliament was adjourned following police and student clashes in the capital, Port Moresby.
The ruling comes after reports the government is considering invoking emergency powers to confront political unrest in the Pacific Island nation, amid ongoing calls for O'Neill to step down and answer long running corruption allegations.
O'Neill's chief of staff, Isaac Lupari, is reported to have told the local press the government is considering activating laws that will give police the power to arrest anyone inciting violence and threatening public and state properties.
The move comes after Port Moresby businessmen demanded O'Neill stand down within 48 hours to answer corruption allegations or face work-stoppages in the aviation, maritime and telecommunications industries, as well as at schools and in the transport sectors in Port Moresby and major cities Lae and Mt Hagen.
Lupari said the National Security Advisory Council would meet on Tuesday.
"This is the committee that advises the Government on security matters, invoking the Internal Security Act, which means that police will have the ultimate power or full powers to arrest anyone who incites public violence and disrupt government services or threaten public property," Mr Lupari told the Post Courier.
"These are criminal acts so that is why the National Security Advisory Council will revoke the Internal Security Act and Essential Services Act. Police are also looking into the matter."
A spokesperson from the Department of Education and the CEO of water utility company Eda Ranu, which supplies Port Moresby, have said their institutions will not participate in the strike.
Airlines Air Niugini and PNG Air have are also reported to have rejected the call to strike.
Former Prime Ministers Sir Michael Somare and Sir Mekere Morauta issued a statement on Monday calling for O'Neill to stand down, arguing he had brought the country to its knees.
"The fact is we are trapped, and sinking," they said in a joint statement.
"We have decided to speak out and urge all Members of Parliament to support a change of leadership and commence a national rescue effort.
"Mr O'Neill should ensure there is a smooth and rapid handover of the Prime Ministership by recalling Parliament immediately and resigning, so that Parliament can elect a new Prime Minister."
They accused O'Neill of trampling on the right to free speech, as well as quashing the the right of assembly for legitimate purposes.
O'Neill, who has been PM since he unseated Somare in a parliamentary coup in mid 2011, rejected the statement on Tuesday as "absolute nonsense."
He told news website Loop PNG the country's economy is recovering well from the fall in global commodity prices.
"Revenue is improving each month and expenses are under control," O'Neill told Loop PNG.
"In fact the GDP has doubled over the years."
Last month PNG police opened fire on University of Papua New Guinea students who were rallying to call for O'Neill to step down.
That incident was followed by more violence at the university of technology in PNG's second largest city, Lae.
The opposition has so far made four attempts at a motion of no confidence vote against O'Neill, who at one point controlled almost 100 MPs in PNG's single house of parliament.