On the eve of the decisive World Motor Sport Council meeting, Bahrain looked unlikely to return to the 2011 Formula One calendar.
Martial law in the troubled island Kingdom ended on Wednesday, just two days before F1's governing body sits in Barcelona to consider a new race date for the postponed season opener.
Bahrain officials insist they are now ready to host a Grand Prix, but F1 chief executive Bernie Ecclestone had warned in Monaco that the event will only take place "If there's peace".
As the state of emergency ended on Wednesday, reports suggested there is still turmoil on the streets of Bahrain.
Al Jazeera television said police used tear gas against continuing protesters, arresting and injuring several of them.
Bahrain will welcome Formula One, and any other event
"With the end of the emergency situation, the security should not be here but they still are," said an eyewitness.
Reuters said the interior ministry denied the reports, while the Bahrain Shura Council's deputy president Jamal Fakhro insisted Formula One can return.
"The end of the national security law and announcement of dialogue are both positive. It will be a shame if anyone is negative about it," he said.
"Bahrain will welcome Formula One, and any other event. There's nothing wrong with that because life is back to normal now and it will be excellent to have it back."