Sipping tea in a smoky Damascus café, Adnan and his wife, Rima, look ordinary enough: an unobtrusive, thirtysomething couple winding down at the end of the working day in one of the tensest cities in the world.

But like much else in the Syrian capital, they are not what they first seem: in normal times, he is a software engineer and she is a lawyer; now, they are underground activists helping organise the uprising against President Bashar al-Assad.

It is dangerous work. Over the past 10 months, many thousands of Syrians have been killed – perhaps twice the 5,000 figure given by the UN – as Assad has pursued a ruthless crackdown that shows no sign of ending. But his opponents are equally determined to carry on.

Adnan and Rima are unable to work or contact their families. They live under false identities. Adnan changes his appearance regularly. He has just shaved off his beard and is wearing a big woolly hat. It clearly works: a friend at a nearby table fails to recognise him.

Most of their friends are on the run from the feared Syrian mukhabarat secret police. But where they used to be scared of fighting the regime, now they have become used to it.

“The revolution destroyed the wall of fear,” he explained. “At school, we were taught to love the president – Hafez first. And it didn’t get any better when Bashar took over. Now, everything has changed. Assad’s picture is defaced everywhere, we can talk openly, and we are certain that at some point we will topple the regime.”

On the face of it, Damascus is calm. The bloodiest frontlines of the revolution may be in Homs, Hama, Idlib and Deraa, but the appearance of normality in the capital is deceptive. Intrigue, fear and anger are never far beneath the surface.

“Damascus is crucial to the survival of the Assad regime,” a leading opposition figure told the Guardian. “They will never allow a Tahrir Square here. If Damascus falls, it’s all over.”

Large protests organised by the tansiqiyat, local co-ordination committees, are held almost nightly in many suburbs, and always on Fridays. But even in the centre, daytime “flash” demonstrations last for a few minutes and melt away before they are pounced on by the security forces, the worst of whom are the shabiha, louts in army trousers and leather jackets who loiter menacingly at junctions and squares.

The demonstrators are ingenious: in one case, volunteer drivers created traffic jams all around the old Hijaz railway station to create a space in which a brief but eyecatching protest could be held.

Creativity and secrecy are crucial. On the first day of Ramadan, loudspeakers concealed in the busy shopping area of Arnous Square blared out the stirring song “Irhal ya Bashar” (“Leave, Bashar”). This is the signature work of Ibrahim Qashoush, who was murdered in July after performing in Hama. His killers cut his throat and carved out his vocal chords.

“At first, people were frightened,” said one Damascus resident who had heard the song. But when it was played for a second time, they relaxed. “By the third time, they were laughing,” he said.

The speakers were positioned on a roof and the area around them was smeared with oil to make it harder to silence them.

The tactics are effective but risky: one activist accidentally started playing a tape of the song in a taxi but the driver turned out to be a mukhabarat agent, who handed him in. Jawad, a computer scientist involved in one of these groups, was held for two months and beaten repeatedly to try to make him betray the names of his friends.

Other nonviolent acts have been stunningly symbolic: in August someone poured blood-red dye into the fountain outside the central bank in Saba’a Bahrat square, the scene of raucous pro-Assad rallies. Black-ribboned candles have been distributed to commemorate Ghayath Matar, famous for handing out roses to soldiers, who was tortured and killed last September.

“People are taking risks here,” said Salma, a human rights worker. “But in Idlib and Homs, it’s a matter of life and death; that’s not true in Damascus.”

Still, some cannot quite believe what they are daring to do. “Look at us,” laughed Bassam, a podgy manufacturer in his twenties, “using false names and driving around to avoid police checkpoints. The first time I went to a demonstration, it was frightening. Now it’s exhilarating.”

Yet no one thinks the revolution will have a happy end any time soon. Last week’s speech by Assad, his first public appearance for months, was seen as a declaration of war designed to rally his supporters.

In the live broadcast on state TV, the crowd looked enormous; in fact, a leaked unofficial shot suggested there were probably no more than a few thousand people in Umayyad Square.

Damascus is surrounded by the army’s fourth division, commanded by the president’s brother Maher. Government buildings are protected by anti-blast barriers. Roads near the presidential palace and defence ministry are closed. Outside the state security HQ, in Kafr Sousseh, machingun-toting guards look out warily from sandbagged emplacements.

It was there, two days before a cheerless Christmas, that twin suicide bombings killed 44 people and were blamed (20 minutes after the blasts) on al-Qaida – a reminder of the unrelenting official narrative that Syria faces only “armed terrorist gangs”, not the mass popular protests that have become an emblematic event of the Arab spring.

On 6 January, terrorists struck again. In nearby al-Midan, an opposition stronghold, there was what looked, at least at first glance, like another suicide attack, which reportedly killed 26 people. But as in the previous bombings, key details remain confused.

Locals spoke of the area being mysteriously cordoned off by police the night before. Many noted the remarkably swift response by the Syrian media and emergency services. And a rapidly assembled crowd of demonstrators, who were not from the neighbourhood, chanted pro-Assad slogans for journalists bussed in by the ministry of information. Suspicions that the event was somehow staged look reasonable, rather than the product of a febrile conspiracy theory.

Abu Muhammad, a chatty Sunni taxi driver, had no doubt about it. “It was pure theatre, all fabricated,” he said. “The idea is to frighten people in Damascus.” Nader, a shopkeeper, was even blunter: “The government knows Syrians don’t believe them. But they count on people being too afraid to break the silence.”

Hassan Abdel-Azim, leader of the opposition National Co-ordination Committee, who is often criticised for being too close to the regime, admitted that he too had “serious doubts” about the official version.

On 11 January, the killing of the French TV correspondent Gilles Jacquier by mortar fire during a government-escorted trip to Homs left more troubling questions unanswered. Was it a warning message to the international media? Official involvement will inevitably be difficult to prove.

What is extraordinary about all these incidents is the automatic assumption of so many Syrians that the regime would act with such murderous duplicity.

“No one has any illusions,” said another anti-Assad figure. “People think [the regime] is capable of anything. There are no red lines.”

The president’s supporters see things very differently. The regime’s grand conspiracy narrative, in which the US, the west, Israel and reactionary Arab “agents”, led by Qatar, plot against Syria, is pumped out daily by state media. Its most aggressive exponent is Addounia TV, a satellite channel owned by the wealthy brother-in-law of Maher al-Assad. Above all Addounia loathes al-Jazeera, the Qatari-owned cheerleader for the Arab revolutions, which it has accused of staging fake demonstrations in studio mock-ups of Syrian cities. In his speech the president referred to 60 TV channels as part of this vast “plot”.

Big lies seem to work. “The emir of Qatar is a Jew, worse than the Jews,” an Alawite taxi driver raged. “There are no demonstrations in Syria, or only by people who have been paid, and the terrorist gangs.” No wonder so many Syrians berate the few foreign journalists who are allowed into the country and urge them to “tell the truth like it really is”.

Regime loyalists who speak to the international media claim to support political reform and dialogue with the peaceful opposition: these are people like the Assad adviser Buthaina Shaaban and Jihad Makdissi, director of information at the foreign ministry, who engages in Twitter debates with supporters of the uprising. Overthrowing the president, warns Makdissi, “will open a Pandora’s box”.

But Syria’s powerful security chiefs, who are unavailable for briefings or interviews, emphasise the grave danger posed by Salafi extremists or al-Qaida – the same “foreign fighters” the mukhabarat used to help cross into Iraq to fight the Americans. Stomach-churning pictures showing decapitated bodies or corpses with their eyes gouged out are produced as evidence of the savagery of these terrorists. Opposition supporters do not claim such horrors are faked but insist the regime bears overwhelming responsibility for the current violence.

“For the Syrian security people, the solution now is to kill until it’s all over and wait until there is some change in the position of the west,” said a well connected but despairing businessman.

Assad supporters also accuse the opposition of naivety and of forgetting the early 1980s, when a wave of assassinations and bombings by the Muslim Brotherhood culminated in the Hama uprising, in which government forces killed at least 20,000 people. But that was 30 years ago: such a draconian “security solution” would be hard to repeat in the age of YouTube – and unlikely to end the uprising.

Sectarianism is also rearing its ugly head, with the opposition blaming the regime for fomenting tensions between Alawites, who dominate the security forces, and the Sunni majority.

In the current climate, it is easily done. Mudar, a young Alawite with close establishment links, tells of a soldier cousin who was killed and mutilated, and then clicks on a high-quality video clip of a bushy-bearded man sawing off the head of his screaming victim.

In an area near the Umayyad mosque, an Alawite woman visiting a Sunni friend said she dare not take a taxi home because a Sunni driver might kidnap her and sell her on to be killed.

Rumblings of concern are audible. Last spring, a group of influential Alawites urged Assad to apologise for the repression and pursue genuine rather than cosmetic reforms. “Alawites feel their fate is connected to the Assads,” warned a veteran opposition leader, “and that is very dangerous.”

Pressure is clearly mounting. Alawite businessmen are reported to have been bribing the mukhabarat to avoid releasing their employees to attend pro-regime rallies. Fadwa Suleiman, an Alawite actress, won huge admiration when she came out in support of the uprising, but she was ostracised and denounced on TV by her brother.

Christians, traditionally loyalists, are worried, too, especially about the Salafi element of the uprising, and the churches keenly demonstrate public support for Assad. To some, though, it seemed a very mixed blessing when Daoud Rajha, a Greek Orthodox Christian, was appointed army chief of staff, perhaps in an attempt to guarantee the community’s support.

Another sign of Syria’s deepening crisis is that the state is no longer functioning properly. It is “collapsing in slow motion”, in the words of one expert. Security chiefs are concerned about bribes being demanded to release detainees. Half the weapons acquired by rebels are estimated to have been sold by army personnel while customs agents look the other way as shipments come in from Lebanon. Rumours persist of different branches of the secret police shooting at each other on clandestine operations. And officials are said to have been destroying documents recording off-the-book payments authorised by a phone call from the president’s palace.

Syria’s economic plight has also deepened in the last few weeks. Power cuts for several hours are day are now routine. Shops in the priciest streets of Damascus depend on generators on the pavement. Petrol is in short supply, in part because of massive use by the security forces, and the prices of heating and cooking oil have risen steeply.

This joke illustrates the impact: Abu Fulan – everyman – buys a chicken for dinner. He asks his wife to roast it but she says, ‘Sorry, there’s no gas.’ Maaleish (never mind), he replies: let’s pluck it and put it in the microwave. ‘Sorry,’ his wife answers, ‘there’s no electricity either.’ At this point, the chicken miraculously comes to life and squawks: Allah, Souriya, Bashar! (“and that’s all you need!”)

The punchline slogan is borrowed from Libya, where the propaganda line was that the only thing people needed apart from God and country was Muammar Gaddafi – until his overthrow and murder. It can hardly be a good omen for Assad.

The president was ridiculed for praising the quality of the country’s olive oil and wheat – an allusion to self-reliance. Yet even if ordinary people grumble and make do, the macroeconomic outlook is bleak. Foreign investment and tourism have collapsed. Hotels are empty. US sanctions block most international financial transactions. The EU has stopped oil purchases. Credit cards can no longer be used. And the value of the Syrian pound has been falling steeply.

The regime understands the dangers but its room for manoeuvre is diminishing: when it banned luxury imports, in November, Sunni businessmen protested. The measure was rescinded a few days later.

It is hardly surprising, then, that all this is taking its toll: doctors report an increase in heart attacks, high blood pressure and other stress-related symptoms. Pharmacists are doing a brisk trade in anti-depressants. Two years ago the government introduced a smoking ban, but government offices, cafes and restaurants are still wreathed in clouds of smoke. People are also drinking more. “Doctors tell you to go and watch some silly Egyptian films – anything except the news,” a friend laughed.

Many now have first-hand experience of the apparatus of state repression, and describe details of underground cells, beatings and torture. It is common knowledge that Iranian security advisers are on hand with their sinister expertise in communications monitoring and riot policing. Damascus feels, and looks, like Tehran in 2009 during protests over the rigging of the presidential election.

“The people who are being arrested now don’t have Facebook pages,” the economist Raja Abdel-Karim said wryly. “They don’t care about actors, journalists and writers. The effect of the footage of the demonstrations and the killings is far greater than any quote someone like me can come up with.”

Abu Ahmad, a middle-aged man who was sacked from his government job, wept as he described being at a funeral in Midan, scene of the last dubious suicide bombing, with his wife and children when the shabiha started shooting.

State media reports only on martyrs among security personnel or regime supporters. Bodies are returned to families bearing unmistakable signs of torture.

“Perhaps the worst human rights violation committed by the regime against the Syrian people is no time to mourn each martyr, no time to grieve,” tweeted the blogger Razan Ghazzawi.

Elements of the anti-Assad opposition are uncomfortable with the “militarisation” of what began as a peaceful uprising inspired by the revolutions in Tunisia, Egypt and Libya. The expectation is that violence will intensify as the Free Syrian Army, composed largely of defectors, continues to grow. “If you shoot at people for months, you shouldn’t be surprised when they start shooting back,” observed one western diplomat.

Overall, Syria’s divisions appear to be deepening. “For the last 10 months, millions of people have occupied the middle ground,” says Badr, a university lecturer. “But Assad is leaving us with no choice.”

Another joke makes the point well: citizens are being told they must no longer wear grey clothes – only black or white are allowed.

No one can accurately predict how long the uprising will continue. On the opposition side, optimism of the will is tempered by a sober realisation that in the short term the balance of forces is not in their favour and is unlikely to change quickly – barring a Libyan-style foreign military intervention, which few want and fewer expect. “Our tomorrow is in our hands,” tweeted one supporter of the revolution, “or we will have no tomorrow.”

Louay Hussein, an independent, Alawite writer and intellectual, said only a political solution could bring down the regime. “The crisis is in deadlock,” he argued. “All the signs are that we are heading for open-ended civil war. Assad still has quite a lot of support. It’s not just a question of repression.”

The economist Abdel-Karim takes the long view. “I have no doubt the regime will be toppled. The problem is that the longer it takes, the more powerful the Islamists will become, and those who advocate violence will gain ground. It’s a question of time and cost: time is getting shorter but the price is getting higher.”

Mouna Ghanem, of the Syrian State-Building Movement, one of very few independent nongovernmental organisations, agrees fully with this gloomy analysis. “We are happy that there is change,” she says. “We thought change would never come to Syria. But we fear what is it going to cost.”

Some names in this article have been changed