A diminished Occupy Boston encampment held its ground early Friday after police decided not to immediately enforce a midnight deadline Mayor Thomas Menino had set for them to leave a city square.

Two protesters were arrested after police said they moved a tent into a street and refused to move, blocking traffic. But there were no other serious confrontations between the demonstrators and supporters who gathered at the site as the deadline loomed.

Boston police Supt. William Evans told protesters that even though Menino set the deadline, he did not specify when the camp would be shut down.

"We're continuing to work with (the protesters)... and hopefully come to a good conclusion where we don't have any confrontations and there are no arrests," Evans told reporters.

Many protesters had pulled up stakes and left the encampment Thursday after learning of the deadline, but others stayed, and some said they were prepared to be arrested.

Demonstrators and their supporters began gathering in the hours before the deadline. Occupy groups from Worcester and Providence, R.I., helped swell the ranks, along with university students, a group of Quakers and some veterans, including a Marine in full dress uniform.

About 1,000 people filled the streets around the financial district and a party-like atmosphere reigned as a marching band played music and people sang and danced.

As midnight approached, Occupy Boston members began organizing those demonstrators willing to be arrested, telling them to stay in the encampment and link arms.

After protesters chanted "We are the 99 percent" and singing "Solidarity Forever" for several minutes, the band began playing again for the crowd.

Hours later, as dawn approached, the scene was markedly quieter, with only a handful of police officers keeping eye on the remaining protesters, a few of whom were still packing up tents and gathering belongings. One protester was raking a portion of the greenway that had been vacated by other members of the movement.

While Menino had previously said the city had no plans to forcibly remove the encampment, he appeared to become increasingly impatient with the protesters in recent days, saying the occupation has become a public health and safety hazard. He issued his ultimatum after a judge ruled on Wednesday that the protesters had no right to stay in Dewey Square.

The protesters have been encamped there since Sept. 30, modeling their demonstration after Occupy Wall Street. Protesters estimate between 100 and 150 activists live in the Boston encampment.

The threat of forcible removal left Boston poised to join several other cities, including New York City, Los Angeles, Philadelphia and San Francisco, where officials moved to oust protesters.

"I think that the mayor used silence as a tactic to win the court case. He never said anything and during radio interviews he said `I'm not saying they have to go, I'm just saying that we want the ability to ask them to go,'" said John Ford, a 30-year-old bookstore owner from Plymouth and a member of the encampment. "Now they want to flip us immediately."

Some Occupy Boston members indicated prior to the deadline they would not leave voluntarily.

"If it comes down to it, I will be spending the night in jail," said a protester who identified himself as Mike Smith, 23, of Boston. Smith added that he was not surprised by the order.

"They have been trying to get rid of us from day one," he said.

Eric Binder, a 38-year-old massage therapist from New Mexico and Kentucky who has lived in the camp for the past month, said he may try to move his tent to Boston Common.

"Every town, every city should have a place to peaceably assemble," he said. "Where in the city of Boston can we set up our tents?"

The American Civil Liberties Union of Massachusetts and the National Lawyers Guild-Massachusetts issued a joint statement calling on the city and police to refrain from "heavy-handed crackdowns" if they decide to remove protesters.

Suffolk Superior Court Judge Frances McIntyre dealt Occupy Boston a major setback Wednesday when she lifted a temporary restraining order that blocked the city from removing protesters. McIntyre said that while the protesters are exercising their rights to freedom of expression from government interference, the occupation of state land is essentially viewed "as a hostile act" that is neither speech "nor is it immune from criminal prosecution for trespass or other crimes."

Lawyers representing Occupy Boston indicated they would appeal, but did not move immediately to seek a stay of McIntyre's ruling.

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Associated Press writers Bob Salsberg and Jimmy Golen in Boston contributed to this report.