Lugo was impeached and stripped of presidency in a vote regional governments and organizations termed a coup.
Latin American economic bloc Mercosur suspended Paraguay and barred its new government from attending this week's summit in Mendoza, Argentina. Lugo, however, will attend the meetings as part of a political message endorsed by several neighboring states and regional organizations.
Lugo found himself pitted against congressional foes after 17 riot deaths, caused when police clashed with squatters in a simmering dispute over unauthorized housing.
Mercosur backed Lugo and a statement from the group condemned his removal as a "legislative, congressional or institutional coup," in which the president was denied time to defend himself against an "express" impeachment vote.
The Union of South American Nations also protested Lugo's removal. UNASUR issued a statement that Lugo's ouster didn't respect due legal process.
Paraguay now says Argentina, Brazil and Uruguay have ganged up on the new government and want Paraguay expelled from the Organization of America States, which has headquarters in Washington.
The political crisis has thrown Paraguay's dysfunctional economy into further disarray, not helped by Venezuela's instant decision to cut off oil supplies that Paraguay receives on reduced and deferred payment basis.
Paraguay's political crisis threatens to create a situation similar to a Supreme Court-led coup in Honduras in 2009 that ousted Jose Manuel Zelaya from the presidency and plunged Honduras into a crisis and bitter confrontation between political interest groups. The situation continues.
All Mercosur presidents openly rejected Lugo's removal outright and are expected to reinforce those positions at the summit in Mendoza.
New President Francisco Franco, who replaced Lugo last Friday, said he would send senior aides to the summit despite the suspension.
Paraguayan Ambassador Hugo Saguier told an OAS meeting in Washington that Argentina, Brazil and Uruguay aimed to have his country expelled from the organization.
He indicated the new government put a lot more store by its membership of OAS than association with either Mercosur or UNASUR.
Paraguay will have no problem withdrawing from regional blocs, "90 percent of the Paraguayan population would abandon Mercosur if they were given the option," Saguier said.
OAS Secretary-General Jose Miguel Insulza said he would be sending a mission to Paraguay to assess the situation.
"It is my duty to collect all the possible information on the situation so the council can adopt a decision," he said.
"We have a conflict and the best is to try and find ways that the conflict begins to calm down and things return to normal until elections are held so that we can anticipate a democratic and constitutional exit to the crisis," Insulza said.
OAS suspended Honduras after Zelaya's ouster in 2009 and readmitted it in June 2011 after elections and the start of a reconciliation process in Honduras.
The Mendoza summit will bring together leaders of both Mercosur and UNASUR countries from Latin America.